Have you heard the term “culture of compliance?” The idea is to boost employee buy-in for compliance by showing how it fuels long-term success.
Beyond pleasing the SEC or state regulators, a culture of compliance can increase operational workflows, boost morale (by reducing violations), and help your firm maintain a pristine reputation of excellence.
Let’s explore five ways to optimize your compliance program and get every employee on board, without spending more than five hours per week on compliance-related responsibilities.
Tip #1: Maintain a Compliance Calendar
A calendar will ensure all necessary tasks are completed throughout the year, and help your firm avoid missed deadlines (which can be costly and devastating). Review the calendar on a regular basis and update it as your firm grows or regulations change
If you don’t already have one, create a compliance calendar and make it known to all employees. This should include:
- Registration renewals
- Reviews and updates of your firm’s written policies and procedures
- Books and records maintenance (client communications, trade documentation, marketing collateral, employee attestations, etc.)
- Key compliance-related responsibilities (many tasks don’t have a mandated deadline, but are imperative, like AML training.)
Tip #2: Enroll All Employees in Your Compliance Program
You’re only as strong as your weakest link. If you don’t have every single member of your firm participating, you’re increasing your risk of potential violations and penalties. At least once a year, hold a mandatory compliance training session, where you review changing regulations and discuss compliance-related policies and procedures.
Create and use a centralized system for employees to find and complete your firm’s compliance-related policies and tasks, including code of ethics disclosures and reporting. And, consider creating incentives and processes that drive buy-in, such as:
- Tie incentives and commission to compliance completion.
- Post weekly stats on the highest percentage of required annual reviews completed for the quarter.
- Use the oversight review to train new employees on how to document client interactions.
Tip #3: Embrace Compliance Software
Software is an expense well worth embracing, as 70% of regulatory compliance issues are traced back to human error. And as we know in this industry, that error could cost millions. Having a dedicated software solution can help you better develop and adhere to consistent processes that reduce mistakes and develop good habits.
The right tool will not only address your current compliance needs, but allow for growth and scale alongside your evolving business. As your firm brings on additional employees and clients, having a tool can optimize your time, alleviate human error, and avoid costly, time-consuming mistakes from the outset.
Tip #4: Work With a Compliance Consultant
When you partner with a compliance consultant, you can take the weight of managing new rulings off your shoulders. Most CCOs require support—there’s just too much responsibility to handle on their own. A compliance consultant or legal expert can be an excellent resource, as they help keep your firm’s compliance program as up-to-date as possible.
But what, exactly, does a compliance consultant do? The right consultants will optimize your time, identify strategies and processes that are tailored to your firm’s needs, and ensure you are well-equipped to manage your compliance demands. The majority of compliance professionals spend far too much time identifying, interpreting and assessing rule changes—often a moving target that can be vacuous and consuming. Compliance leaders should not have to shoulder that burden alone, and that’s where consultants can mitigate compliance officer fatigue.
Tip #5: Automate Where Possible
Whenever you can, you should automate things like attestations, workflows, forms, and approvals, so that you can spend less time on these low-value tasks that can be very time-consuming and often overlooked. It’s not that these jobs they aren’t important or widely discussed, but because they require incredible diligence to maintain. And it cannot rest on one person’s shoulders – it must engage all employees. Always being “audit-ready” requires more than simply sharing recorded assets when the SEC calls; it means showcasing proof that your firm has a repeatable, secure, and thorough compliance process in place at all times.
Automate and then regularly validate your automation. Make sure any tool you are using allows you to reconcile against a second data source.
Maximize the Effectiveness of Your Compliance Processes
In today’s regulatory environment, things are constantly changing—it’s become a necessity to rely on outside resources like consultants and platforms (or risk missing critical updates). By working smarter, not harder, you can ensure your compliance-related tasks don’t take too much time away from other high-value tasks, like fostering connections with clients.
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Patrick Hunt is CEO of Smartia
