As technology transforms financial services, regulation must likewise evolve. Ian Russell, IIAC president and CEO, has suggestions for regulators to do just that.

Read: Financial planning goes robo

In his latest industry letter, Russell describes how tech has enabled new fintech applications, like robo-investing; the electronic integration of financial products and services across platforms; and more personalized service using data analytics to better predict and serve client needs.

“The robo-investing option, combined with direct financial advice provided at distinct intervals at account opening or portfolio rebalancing, times of market stress and client age milestones, enables advisors and firms to service small investors and portfolios on economically viable terms,” says Russell. “This is a win-win for smaller dealers.”

Read: What happens when advisors use robos

Digitization continues to transform business operations and structure in the wealth business, yet regulators aren’t keeping up. That’s evident from how regulation of financial technology has focused on fintech entrants, instead of on how the regulatory framework should change.

Read: How robo-advisors have it rough

Says Russell: “The current regulatory siloed approach between registrants does not accommodate the ways in which technology could allow information to be shared among all relevant service providers to deliver a seamless, efficient and comprehensive financial services picture and experience for clients.”

Regulators should “prioritize efforts to uncover and remove roadblocks to efficient practices, and find a means to adapt regulation to the current environment without jeopardizing investor protection,” he says.

For example, as an incremental step toward the type of regulatory change he describes, Russell says regulation that’s been modified for fintechs—such as streamlined onboarding requirements—should apply equally to investment dealers and other registrants if they offer tech platforms to clients.

Read: Are robos regulated like humans?

As regulation evolves, Russell envisions a greater reliance on principle-based regulation and the need to give auditors greater discretion and judgment in assessing compliance with the rulebooks.

For full details, read Ian Russell’s letter.