Compliance 2.0 – Being a Strategic Partner in Your Firm

Compliance as a profession continues to evolve. With Enron, Bernie Madoff and numerous other failures paving the way for rulemaking across industries and nations, the days of drawing a short straw, getting drafted into a compliance role and operating in isolation outside of the business are – or should be – ancient history.

Since the adoption of the Compliance Rule in 2004, compliance officers at investment advisers have had an important and clearly defined role, one that was thoroughly discussed at the recent Ascendant Compliance Solutions Strategies Spring 2019 Conference in Miami. As noted by CSS Executive Director Jackie Hallahan, SEC rhetoric about the importance of compliance bolstered the role of chief compliance officer, resulting in greater opportunities for compliance professionals to attend conferences, and further enhancing view of compliance as a valued profession. In evolved programs, compliance professionals are called upon to provide practical guidance, have a “seat at the table”, and participate in strategic initiatives.

Challenges remain. Sometimes compliance is not appreciated until an exam is going badly and the threat of fines and reputational damage looms. Ms. Hallihan notes, “SEC deficiency letters now will indicate if the Staff determine the compliance function is understaffed, has inadequate resources, or the CCO lacks expertise.”

It is crucial for firms to spend time on structuring roles within the compliance department, from entry level on, with a defined career path. Being able to explain opportunities to grow in a role can help a firm recruit top talent. Since compliance roles typically have touch points with all areas of a firm, staff can develop relationships as a strategic partner and may even be recruited to roles in the business. Mark Happe, CCO, Group Retirement AIG Life & Retirement, says, “That’s a win-win. Then you have someone in the business that truly understands the compliance culture. You have an evangelist at that point.”

Defining roles is a critical step. Look at the organization and think about what rightfully belongs in compliance, where compliance should do monitoring, and where compliance needs lines of sight. Be crystal clear about your roles and responsibilities—what you’re doing, when, and how you are escalating. Define your roles, but just as importantly, define what you don’t do. If you’re not a supervisor, explicitly include that in your compliance manual. Ms. Hallihan suggests, “Take a look at your manual. Search on CCO/compliance and analyze what you are assigned to be doing. It may sound like you’re really powerful, but you’re more powerful if appropriate tasks are being done by the business.”

Being a strategic partner in your firm also requires empowerment, subject matter expertise, access to information and reporting (“line of sight”), appropriate resources, and being proactive. Build credentials, take examinations, attend conferences, embrace technology. Going forward, compliance professionals who don’t effectively use technology will be replaced by those who do. Matt Calabro, Director of Institutional Wealth Manager Services at Compliance Solutions Strategies, notes, “The revolution is sneaking up on us!”

Don’t be left behind. In preparing for the next evolution of the profession – Compliance 3.0 — remember that relationships are critical, so be a supportive member of the team. Define what you do with specificity and elevate yourself. You need to do it for your organization, your staff and yourself.


Subscribe to CSS Blog

CSS frequently publishes blog posts which are written by our team from their observations in the field, at conferences and through experiences with compliance professionals. These posts are designed to further knowledge and share industry best practices. Topics run the gamut, including Form ADV, cybersecurity, MiFID II, position limit monitoring, technology challenges and more. Complete and submit the brief form below to receive notifications when we publish new content.

Loading form...

Latest Content

Proposed Amendments to Transaction Cost Calculations under PRIIPs

The European Supervisory Authorities (ESAs) recently issued a consultation paper that includes two draft proposals for changes to transaction cost calculation requirements outlined in Annex VI points 7-23, among other proposed amendments to the PRIIPs KID. The first proposal seeks to reduce the impact of negative implicit costs on net transaction cost disclosures, in addition … Continued

Introducing the Regulatory Book of Record (RBOR)

I recently had the opportunity to sit down with our Chief Product Officer Ronan Brennan to discuss regulatory data management in front of an intimate and engaged audience of CSS conference attendees in Scottsdale, Arizona. The group ranged from small fund managers to large institutional asset managers, so it was difficult to boil down the … Continued