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PODCAST

Member Relations & Education: Reimagining the Future of Engagement

January 12, 2021

If you've ever been to a FINRA conference or boot camp, participated in a small firm call or graduated from the Certified Regulatory and Compliance Professional (CRCP) program, you've benefited from the hard work of FINRA's Member Relations and Education team.

Member Relations and Education is responsible for ensuring FINRA's regulatory programs are working for everyone and maintaining a strong relationship with FINRA's member firms.

On this episode, we talk to Kayte Toczylowski, the group's new head, to hear how they've adapted in the face of COVID-19 and what the future looks like for this group.

Resources mentioned in this episode:

Get Involved

Committee Lists and Membership

Conferences & Events Schedule

Virtual Conference Panels

FINRA Institute at Georgetown CRCP Program

Regulatory Notice 20-42

Listen and subscribe to our podcast on Apple PodcastsGoogle PlaySpotify or where ever you listen to your podcasts. Below is a transcript of the episode. Transcripts are generated using a combination of speech recognition software and human editors and may contain errors. Please check the corresponding audio before quoting in print. 

FULL TRANSCRIPT 

00:00 - 00:31

Kaitlyn Kiernan: If you've ever been to a FINRA conference or boot camp, participated in a small firm call or graduated from the CRCP program, you've benefited from the hard work of FINRA's member Relations and Education team. This group is responsible for ensuring FINRA's regulatory programs are working for everyone and maintaining a strong relationship with FINRA's member firms. On this episode, we talk to Kayte Toczylowski, the group's new head, to hear how they've adapted to the face of COVID-19 and what the future looks like for this group.

00:31 – 00:40

Intro Music

00:40 - 00:54

Kaitlyn Kiernan: Welcome to FINRA Unscripted, I'm your host, Kaitlyn Kiernan. Today, I'm pleased to welcome to the show for the first time, Kayte Toczylowski, FINRA's new vice president of Member Relations and Education. Katie, welcome to the show.

00:54 - 00:56

Kayte Toczylowski: Thanks so much for having me here, Kaitlyn.

00:56 - 01:16

Kaitlyn Kiernan: Katie, as the new head of Member Relations and Education, our listeners can expect to hear from and once we get back to normal, see a lot of you. But while you are newish to Member Relations and Education, you aren't new to FINRA. To start off, can you just tell us a bit about your background and how you got to where you are today?

01:16 - 02:38

Kayte Toczylowski: Sure, I would love to. So, I started out actually not in the finance realm at all or the securities industry. I was an English major thinking I would go to law school. And while I started to look into that after graduation, I found student loans were kicking in and a lot more expensive than I thought they would be. So I thought I would work for a year or two and then make the decision on what I wanted to do and found my way to Janney Montgomery Scott, which is a broker-dealer in the Philadelphia area, working in their compliance and legal department and truly just loved the work.

And when I started, I didn't know what compliance meant. I didn't know really the difference between a stock or a bond. But I learned quickly and my experience at Janney led me to FINRA, which was actually right next door to Janney's headquarters where I worked. As you said, I'm not new FINRA, although I'm new to Member Relations and Education. I've been here at FINRA for about nine years now, almost 10, it will be 10 later this year. I started as an examiner and then worked my way up through the management chain as an examination manager and then as the Associate District Director in the Philadelphia office, pretty much overseeing all of FINRA's routine examinations in the Philadelphia district.

02:39 - 02:45

Kaitlyn Kiernan: And how would you say that your previous experience, both at FINRA and at Janney, prepared you for this role?

02:46 - 04:25

Kayte Toczylowski: Yeah, truly, my background has really shaped my perspective in various different ways that I really think is important for this role that I currently have. So, at Janney, as I said, I started in the compliance department, and actually as an administrative assistant, and worked my way up as a compliance analyst and then doing branch examinations where I would travel to all of Janney's various branch offices, meeting with operations personnel, sales assistants, our registered financial professionals, and talking through with them how they were complying with not only with Janney's rules and policies and procedures, but also FINRA's rules and regulations and really understanding the challenges that sometimes arose with trying to do what's right by the customer, but maybe running into some obstacles on how to comply with the rules or really how to understand how the rules apply to them.

So, I can take that experience, but then also marry it up with being a FINRA examiner and understanding why we have these rules and regulations and investor protection and market integrity. But I also can balance that examination side with the experience that I had dealing with the registered financial professionals on the sales side while working at Janney. So really taking both of those perspectives, having seen both sides, walking in both sides' shoes, that perspective really helps me connect with both our member firms and our FINRA colleagues and then try to help to see each other's viewpoints. And I'm finding that's really impactful in this new role.

04:25 - 04:32

Kaitlyn Kiernan: Yeah, that sounds like a great perspective to have in this role. And what attracted you to FINRA nine, 10 years ago?

04:33 - 05:57

Kayte Toczylowski: So FINRA's mission, I will say really, I think if you talk to most FINRA employees, they'll say that the mission really sings true for them. And that was the case for me as well. Working in compliance, really, investor protection was something that drove me there as well. And compliance is really a tough job and it's not always very popular with the sales force or the business side. So, it was really exciting for me to come to FINRA where that truly is the focus of what we do. You don't really have to worry about going up against the business or trying to implement changes that may be taking away from the business's profit. So, it was really nice to come to FINRA, we're really, truly investor protection and market integrity are at our core.

Also, when I worked in compliance at Janney sometimes the relationship between the regulator and the firm was not always productive. Sometimes it felt a little confrontational. And I really, truly feel like we can accomplish so much more if there's a partnership. We are self-regulatory organization, so that partnership between our member firms and FINRA, I feel like we can really help one another so much more in that capacity. And I felt that way while I was at Janney, so I wanted to come to FINRA and try to help make a difference in that area. So, I'm really excited to be working in this new role because I think I can really help impact and strengthen the great partnership that exists now.

05:58 - 06:11

Kaitlyn Kiernan: It sounds like, you were in Member Supervision, previously you worked closely with Bari Havlik, so it's great that you have the partnership internally there to help in your role as now the head of Member Relations and Education.

06:11 - 06:24

Kayte Toczylowski: It really is truly helpful to have those relationships established here internally as well. FINRA is a pretty big organization and it's great to know who to call when I need to get an answer to one of our member firms.

06:25 - 06:38

Kaitlyn Kiernan: So, you joined the Member Relations team in April and overlapped with Chip Jones as he made his transition into retirement. When you joined in April, what were your initial thoughts of the team?

06:39 - 07:34

Kayte Toczylowski: Well, first, what an interesting time to join this specific team. It was the start of the pandemic. And our team is really known for our conferences and events, which are in person. And so, we really had to rethink how to deliver our content and also help our member firms navigate through these unprecedented challenges that they were facing. So, it was quite an interesting time to join this team in this role. But I will say my first impressions were how incredibly seasoned, professional and hardworking this team is. I am still so impressed with the output that they're able to produce. It's hard to believe that there are only 14 total people, including myself in Member Relations and Education. We are small but mighty, and I am still so impressed with everything that they can accomplish day in and day out.

07:35 - 07:42

Kaitlyn Kiernan: You mentioned the conferences, but can you give a quick overview of what that 14-person team does?

07:42 - 10:29

Kayte Toczylowski: Yes, of course. So really, there's three main areas that Member Relations and Education is responsible for. The first one is member outreach. So, this includes facilitating various FINRA advisory committees and also our regional committees to ensure that FINRA is understanding the challenges currently faced by firms. Then we also have our events, which, like you said, we're well known for those. We have our flagship event, the FINRA Annual Conference and the FINRA Small Firm Conference. Those are just two examples. These conferences and events really allow our firms to connect, network with each other and with our staff. Our second main area is a member education.

So, we have member outreach, we also have member education. This includes our boot camp program, which really focuses on giving member firms the fundamentals of various compliance concepts. We also offer seminars. This is more in-depth knowledge on specific subject matter, such as anti-money laundering or cybersecurity. And then we also, new in 2020, started to offer virtual conference panels, which was in reaction to having to cancel our Annual Conference amid the pandemic. And these have really created such an opportunity for us to educate the membership in a little bit of a different way.

 We have pre-recorded conference panels. There are about forty to forty-five minutes in length on all various compliance topics and really timely regulatory information to share with our membership. We house all of these on FINRA.org. You just have to search for "virtual conference panels" and they're there for free for firms to view as many times as they would like. We're really building a library of these to help educate our firms. Two of the most recent that we published late last year were supervising independent contractors and the supervision of high-risk activities. So, I encourage all of our listeners to go listen to those.

And lastly, within member education, we run the FINRA Institute at Georgetown Certified Regulatory and Compliance Professional Program, which we commonly referred to as our CRCP program through Georgetown. Lastly, our team focuses on compliance tools that we can offer to our membership. They help members conduct self-compliance through our report cards. This allows firms to take a look at how different market regulation reporting and various other reporting is stacking up against the industry so that they can see if there's any red flags that are occurring ahead of any type of FINRA inquiry or examination. We also help produce checklists and templates that can help firms strengthen their compliance programs.

10:30 - 10:40

Kaitlyn Kiernan: And we'll link to those resources in our show notes. And I can also personally recommend the CRCP program when that starts up again as a graduate of the program.

10:40 - 10:41

Kayte Toczylowski: Fantastic.

10:41 - 10:47

Kaitlyn Kiernan: So, shout out to my 2019 graduate class, which I know some of them are listeners.

10:48 - 10:54

Kayte Toczylowski: Yes. Fantastic. I'm so glad that you attended and found it useful and thanks for linking to the resources to.

10:54 - 11:01

Kaitlyn Kiernan: Of course. And so, where does Member Relations and Education fit within FINRA?

11:02 - 11:23

Kayte Toczylowski: So, we are part of the Board and External Relations department. This includes Corporate Communications, which I know Kaitlyn, we work closely together as colleagues in Board and External Relations. Investor education is also part of this group, as well as International Affairs, Government Affairs and our Corporate Governance team.

11:24 - 11:31

Kaitlyn Kiernan: Yeah, there's a lot of overlap there. And as we kick off this New Year, what are your priorities for 2021?

11:32 - 11:37

Kayte Toczylowski: Well, my biggest priority for 2021 is in-person events and outreach!

11:37 - 11:38

Kaitlyn Kiernan: I think everyone would love that!

11:39 - 12:32

Kayte Toczylowski: I would love to get back out there and get out there really in this new role and connect with our membership and create networking opportunities for our FINRA colleagues and our membership together, in-person. So that is definitely the biggest priority for 2021. But seriously, really to find our new normal and to gain some greater efficiency and consistency in how we operate as a department.

And we're finding that we can complement our in-person outreach with virtual outreach, as well. So, we really want to find a good balance there so we can be operating as efficiently as possible. We also want to focus on helping our member firms navigate the return to work and the return to our new normal. As I think we all know, the world is still going to look a lot differently in 2021 than it did in 2019.

12:33 - 12:40

Kaitlyn Kiernan: Yes, I think that is one thing we can take away as we kick off January. And long term, what's your vision?

12:41 - 13:56

Kayte Toczylowski: So, my long-term vision is to ensure that we are incorporating new faces and new perspectives in not only our advisory committees and regional committees, but also in who we invite to speak at our various FINRA events. Just ensuring that we are casting our net wide and really hearing from diverse voices. I also want to focus on strengthening our flow of feedback, so to ensure feedback is flowing both ways.

We have a lot of feedback that comes into us from member firms and I really want to take a look at how are we responding to that? How can we be providing more proactive information to help alleviate obstacles or roadblocks that our member firms are facing. But also, I want to see what else we can be asking firms, working with our FINRA colleagues to ensure that we're going out to our firms and getting perspectives proactively while we may be thinking about a change here at FINRA, either in our operations or in our policymaking. So, we do all of this now, but I really want to take a look and see if we can be strengthening it and if we can be making it more impactful.

13:56 - 14:21

Kaitlyn Kiernan: And you mentioned this a little bit earlier, but one of the benefits that our CEO Robert Cook mentions frequently in regard to FINRA's self-regulatory organization structure is that we get to benefit from firms' experience and expertise and knowledge. And one way we do that is, as you mentioned, the regional and advisory committees. Can you tell me a little bit more about how these committees work?

14:22 - 16:03

Kayte Toczylowski: Yes, of course. So FINRA has 12 advisory committees and they provide feedback on rule proposals, regulatory initiatives and industry issues. My team handles our industry focused advisory committees. So, this includes our Small Firm Advisory Committee, Large Firm Advisory Committee, Membership Committee and our Clearing Firm Committee. Now, our Membership Committee, just so all of our listeners understand, I think Small Firm, Large Firm and Clearing Firm, it is pretty self-evident what types of firms make up those committees. Our Membership Committee is a cross section of the securities industry and it includes representatives from medium-sized member firms and firms that are independent dealers or affiliated with insurance companies.

The remaining committees are more specialized, and I will go through and name them just for everybody's awareness. We have a committee focused on Investor Issues. We have a National Arbitration and Mediation Committee, Market Committee, Corporate Financing, Economic Advisory Committee, a Financial Responsibility Committee, a Fixed Income Committee, and lastly, a Uniform Practice Code Committee.

And then, Kaitlyn, you also mentioned, in addition to our advisory committee structure, we also have the regional committees. So, there are five regional committees that are made up of our five different FINRA regions, which includes West, Midwest, North, New York City and South. They also serve a very important role of not only providing input on the impact of FINRA's regulatory programs, but also communicating the high-level information they receive during committee meetings with their constituents in their different regions.

16:04 - 16:09

Kaitlyn Kiernan: That sounds like a really great role to play. Are there any other benefits to serving on the committee?

16:10 - 16:43

Kayte Toczylowski: There are, and it's a really exciting opportunity for our committee members. They have the ability to serve as panelists in FINRA disciplinary proceedings. So, our Office of the Hearing Officers, which we refer to as OHO, acts as FINRA's courthouse, and they facilitate all of our disciplinary hearings. Both our regional and advisory committee members, both past and present, are able to serve as an industry panelist in these proceedings. So, it's another great opportunity to be involved.

16:44 - 16:49

Kaitlyn Kiernan: And how many individuals and firms are currently involved with our advisory committees?

16:49 - 17:07

Kayte Toczylowski: So, this is something I have learned a lot about since I joined this team back in April, and it is fantastic how many folks are involved. There are more than 160 industry members involved in our advisory committees and t35 non-industry members that also serve on the committees.

17:08 - 17:13

Kaitlyn Kiernan: That is quite a few. And how would someone get involved with these committees?

17:14 - 18:14

Kayte Toczylowski: So glad that you asked that, because, as I said, one of my biggest priorities is to get new and fresh perspectives, especially in our advisory committees and regional committees, so I'd love to talk to our listeners about how to get more involved. The advisory committees, there is an Indication of Interest form on FINRA.org on our governance page. You can go there today, log on and just fill out some information. You can tell us the areas of your expertise and also which committees you would like to get involved in. So that's a great way to express your interest.

Also, for the Small Firm Advisory Committee, as well as our regional committees, those committees have elected positions. So, in the fall, usually around September of each year, FINRA will issue a Regulatory Notice regarding these elections. So be on the lookout for the Election Notice. It's a pretty easy process to self-nominate and then if there's a contested ballot, it will go up to election in the fall.

18:15 - 18:19

Kaitlyn Kiernan: So, if someone was interested, what kind of commitment they looking at?

18:20 - 19:12

Kayte Toczylowski: Sure, so if you get elected to one of our committees in the advisory space there's definitely a little bit more of a time commitment. So, our advisory committees meet about four times a year. And since most of the advisory committees do review all of our board action proposals, so any rule, amendment or rule proposal does go through our advisory committee process first before going to our Board of Governors, there's some time that goes into reviewing those proposals, really opining on them and understanding how it would impact your firm or the business model type of your firm. So, there is some preparation that goes into it before the meetings are held. So, there is a little bit more of a time commitment there. Right now, we're holding our advisory committees virtually. Hopefully when we get back to in-person meetings there will be a travel component as well. That's also a bit of a time commitment to travel to the advisory committee meetings.

19:12 - 19:15

Kaitlyn Kiernan: But also, I imagine, a great networking opportunity as well?

19:16 - 19:49

Kayte Toczylowski: For sure! I know a lot of our advisory committee members are looking forward to getting back together in person just for that relationship building aspect. Now, our regional committees have a little bit less of a time commitment. There are only two meetings per year, usually one in the spring and one in the fall. And again, I will say at times there may be a travel component to get to those regional committee meetings, but we do find that meeting in person is very beneficial and helps with that networking, not only with FINRA colleagues, but also the firms find it very beneficial to network and learn from each other as well.

19:50 - 19:55

Kaitlyn Kiernan: And what is the impact that these committees have on FINRA and FINRA's business?

19:56 - 20:47

Kayte Toczylowski: It really, truly is the voice of the membership during our policymaking and rulemaking process. So, we rely heavily on our committees to share with us what regulatory changes are negatively impacting their business. What are they hearing from their networks, from their firms, either in their region or in their same business model? What do they need us to hear? As you said, we're self-regulatory organization and we so rely heavily on our advisory committees to help give us that feedback and really help voice what we can be doing a little bit differently. It also helps us just to be a stronger and smarter regulator. We want to truly understand what's going on in our member firms and how we can complement that with the regulation instead of really fighting against it.

20:47 - 21:08

Kaitlyn Kiernan: And speaking of the rulemaking process, which we did have a podcast on for anyone interested in learning more about that, but I understand that FINRA will be conducting a retrospective review of the new rules and amendments that have been made during this COVID-19 remote work period. Can you talk a little bit about that and why we're doing that?

21:08 - 22:48

Kayte Toczylowski: Yes, of course. So back in December, FINRA published its Reg Notice 20-42 and this asks firms to provide comments and feedback on lessons learned from stakeholders' experiences during the pandemic, including the impact of changes made to member firms, operations and business models, the effectiveness of business continuity planning and really, FINRA wants to hear whether it should consider changes to its rules, operations or administrative processes to address these lessons learned during the pandemic, or really even to address anticipated long-term impacts of the pandemic on member firms and the investors. So, we're really, truly looking from a wide view.

We know the world is going to look differently. We're having internal conversations here at FINRA just on internal FINRA operations and how they may look differently given remote work and all that we can accomplish in the virtual setting. So, we understand firms are doing the same thing. We've been already hearing some feedback through our committee process that even customers, the investors, are conducting their business a little bit differently now. And registered financial professionals are utilizing Zoom and other technology to facilitate conversations. And there's some challenges with the way that the FINRA rules are currently written in this new world.

So that's why we're doing it. We want to understand that feedback. We want to understand where our members feel the industry is going, so we can take a look at our FINRA rules and regulations and make sure that we're ready for the future as well.

22:48 - 22:53

Kaitlyn Kiernan: We'll have to do an episode on that when we get closer to having something to say on it.

22:54 - 22:54

Kayte Toczylowski: That'll be great.

00:22:55:03 - 00:23:12:27

Kaitlyn Kiernan: And you mentioned firms and FINRA are changing a lot of how they're doing things. So, looking at your department, we talked about how a lot of your department's events have gone virtual over the past year. Can you tell me a little bit more about how the work of your department has changed recently?

23:13 - 24:18

Kayte Toczylowski: Yeah, sure. So, it's really interesting, the output and the work really hasn't changed. So, we're still conducting outreach and education and enhancing our compliance tools. We're also still getting all that feedback through our committee process. So, the work and the output really hasn't changed. But how we deliver that work has basically changed in every imaginable or possible way that it could change. So, we're finding that it looks different. We had to be pretty creative and innovative in how to get our education out there and convert our boot camp programs to Zoom rooms. And much like how our school systems, how to convert their classrooms to virtual, that's what we did for our boot camps. As I talked about earlier, we have our Virtual Conference Panels, which is something new, but it's still the goal of educating our membership and getting compliance and regulatory information and initiatives out to our membership timely. So, I think the work has stayed the same. It just looks a little bit different.

24:19 - 24:24

Kaitlyn Kiernan: And as we look to the future, do you see any of these changes sticking around?

24:24 - 24:59

Kayte Toczylowski: I do. The team sees this really as an opportunity. We have the ability to reach more member firms with more content than we've ever had the opportunity to do before, because travel sometimes can be a barrier to folks to attend our events or travel and the cost of that and the cost of putting on a conference and events can be a barrier to us providing more conferences and events a year. So truly, we find offering virtual content as a complement to in-person can just help us deliver content to more people.

24:59 - 25:26

Kaitlyn Kiernan: Well, Kayte, thanks so much for joining us. I'm really excited to see what the future of Member Relations and Education looks like under your leadership. Listeners, if you don't already, make sure you subscribe to FINRA Unscripted on Apple Podcasts, Spotify or wherever you listen to podcasts. If you have ideas for future episodes as we look ahead to 2021, you can send us an email at [email protected] Until next time.

25:26 – 25:32

Outro Music

25:32 - 25:59

Disclaimer: Please note FINRA podcasts are the sole property of FINRA and the information provided is for informational and educational purposes only. The content of the podcast does not constitute any rule amendment or interpretation to such rules. Compliance with any recommended conduct presented does not mean that a firm or person has complied with the full extent of their obligations under FINRA rules, the rules of any other SRO or securities laws. This podcast is provided as is. FINRA and its affiliates are not responsible for any human or mechanical errors or omissions. Parties may not reproduce these podcasts in any form without the express written consent of FINRA.

25:59 – 26:05

Music Fades Out

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