Why Coaches Fall Into the Compliance Trap and What Regulated Businesses Must Know
- Brainz Magazine
- Jul 1
- 5 min read
Written by Joe Patneaude, Executive Coach
Joe Patneaude is an Executive Coach and creator of the STAR Scalability℠ Method. He helps business owners and leaders scale financial services firms efficiently. He is the author of Follow the STAR: Unlock Monumental Business Growth and a certified Neuro-Linguistic Programming (NLP) Practitioner.
Not all business advice is created equal. If you’re running a company in a highly regulated industry, like financial services, insurance, or healthcare, you already know this. You’ve likely had moments where well-meaning guidance didn’t just feel off; it felt risky. Maybe it was a recommendation to tweak your website copy, roll out a new marketing funnel, or implement a shiny AI tool, only to realize later that following that advice could put you in violation of compliance rules.
The truth is, great advice can still be the wrong advice, especially when it comes from someone who doesn’t fully understand the industry you’re operating in.
In today’s world, coaching has become a booming business. But for business owners working under regulatory scrutiny, hiring the wrong coach isn’t just a waste of money, it can become a liability.
The problem: Misapplied coaching in regulated industries
Most coaching programs are built with a “universal” audience in mind. The frameworks are designed for entrepreneurs and founders in tech, retail, or service-based businesses, industries with fewer constraints and more flexibility in how they operate and promote their offerings.
But when you're in a regulated industry like financial services, insurance, or healthcare, the rules are different. Compliance isn't a box to check after a decision; it's a fundamental part of how decisions are made. And when a coach doesn’t understand that, their advice, however well-intentioned, can lead you straight into trouble.
I've seen coaches suggest messaging updates that would trigger violations of the SEC’s Marketing Rule. Others have recommended AI-powered tools for client communications without considering privacy regulations, disclosure rules, or documentation standards. One client even implemented a new CRM based on a coach’s advice, only to find it lacked the audit trail functionality required by their oversight body.
These aren’t small issues. They’re risks that can lead to disciplinary action, reputational harm, or loss of licensure. And in industries where trust is everything, even a minor misstep can erode years of credibility with clients, regulators, and peers.
Real-world risks: When well-meaning advice goes wrong
To be clear, most coaches aren’t trying to steer clients into trouble. The problem is, they don’t know what they don’t know. And in regulated industries, that ignorance can come at a steep cost.
1. The marketing rule misstep
An investment advisory firm hired a coach to help “modernize” their brand and attract new clients. The coach suggested language for their website homepage and bio pages, language that would have violated the SEC’s Marketing Rule by making unsubstantiated performance claims. If the changes had gone live, the firm could have triggered a formal audit, been required to issue corrective disclosures, or been penalized financially.
2. The AI tool that backfired
Another firm was advised by a coach to implement a third-party AI chatbot for client engagement. While the technology itself was impressive, there was no review process to ensure it aligned with the firm’s disclosure requirements, data privacy obligations, or communication archiving policies. Worse, the coach failed to advise the firm to update its regulatory disclosures regarding the use of AI, an oversight that could have led to violations of SEC guidance and firm-specific policies. The compliance team discovered the tool only after it was live, putting the firm in breach of both internal protocol and external regulations.
3. The CRM that couldn't comply
A coach recommended a new CRM platform to improve client tracking and follow-up. What they didn’t realize was that the platform lacked the audit trail, data retention, and supervisory features mandated by the firm’s broker-dealer agreement. The result? A costly migration, wasted staff time, and a compliance review that flagged multiple deficiencies.
What regulated business owners should look for in a coach
The right coach can be a powerful asset, but only if they understand the landscape you’re operating in. For business owners in regulated industries, that means working with someone who can deliver strategic value without compromising compliance or credibility.
1. Industry fluency
Your coach doesn’t have to be a compliance officer, but they should speak the language of your industry. If they don’t know the difference between a registered representative and an Investment Advisor Representative, or don’t understand the limitations and requirements of client testimonials, that’s a red flag.
2. Strategic tailoring
Beware of one-size-fits-all coaching programs. Regulated businesses need more than templated funnels and buzzwords, they need strategy that accounts for their structure, oversight, and obligations. Look for someone who takes time to understand your specific environment and goals before offering solutions.
3. Compliance awareness
A great coach won’t give you legal advice, but they will ask the right questions before suggesting new tools, messaging, or models. They’ll encourage collaboration with your compliance team and build frameworks that fit within regulatory parameters, not around them.
4. Respect for reputation
In regulated industries, trust is currency. A coach should understand that every decision, even internal ones, can influence how you’re perceived by clients, staff, and regulators. Advice that jeopardizes that trust isn’t just bad coaching, it’s a liability.
How I approach this differently
As someone who’s held leadership, operations, and compliance roles within financial services firms, and who’s built and sold businesses of my own, I don’t approach coaching from the outside looking in. I’ve lived it. I understand how a decision that seems simple on the surface, like revising a script, adding a tech tool, or restructuring a team, can ripple through your compliance program, client trust, and business model.
That’s why I developed the STAR Scalability℠ Method. It’s not a plug-and-play system; it’s a framework designed to help leaders grow while staying grounded in what actually works for their business, their industry, and their values.
Strategy isn’t just about growth; it’s about alignment with regulatory constraints and long-term goals.
Assets include your processes, tools, and communication systems, and those must be optimized without violating the rules that govern them.
Every part of STAR is built with real-world complexity in mind. Because scalable success in a regulated industry doesn’t come from cutting corners; it comes from building with clarity.
Conclusion
Coaching can be an incredible asset, but only when it respects the full reality of your business. In regulated industries, the wrong advice isn’t just ineffective, it can be expensive, distracting, or even dangerous.
That’s why choosing a coach who understands your space is essential. You need someone who sees the nuance, speaks the language, and builds strategies that move your business forward without putting your credibility, or compliance, at risk.
If you're looking to scale without compromising the trust you've earned or the rules you operate under, there's a better way.
Book a 30-minute Transformative Session here to explore how the STAR Scalability℠ Method helps regulated businesses grow with confidence, clarity, and control.
Read more from Joe Patneaude
Joe Patneaude, Executive Coach
Joe Patneaude is a Certified Executive Coach who helps business owners and leaders scale with purpose, clarity, and confidence. After rising through the ranks in financial services—from the mailroom to the C-suite—Joe realized that true success isn’t just about growth, but about alignment with personal values. This insight led him to develop the STAR Scalability℠ Method, a practical framework that guides business owners to scale in a way that supports both profitability and well-being. Today, he coaches leaders ready to move beyond burnout and build thriving, scalable businesses. He is also the author of Follow the STAR: Unlock Monumental Business Growth and a certified NLP Practitioner.
