Keeping Your Compliance Program on Track

Keeping Your Compliance Program on Track

This year more than ever, it’s a time for renewal and optimism. As compliance professionals, we have completed our reviews of last year and updated our ADVs, so now it’s time to start working on our real goals for the year.

At the time of this writing, it appears that Gary Gensler, President Biden’s choice to lead the SEC, will be confirmed by the Senate and arrive at the Commission shortly. Gensler has a reputation as an active regulator and will seek to implement the administration’s priorities around climate change and diversity. These initiatives will likely manifest themselves in increased disclosure and potential new rules.

On March 3, 2021, the SEC’s Division of Examinations released their examination priorities for 2021. As in prior years, their examinations will prioritize the protection of retail investors, including seniors, teachers, military personnel and those saving for retirement. As part of this initiative, examinations will look at how registered investment advisers meet their fiduciary obligations and, similarly, how broker dealers are complying with Reg BI. The Division also found that many advisers did not file Form CRS when they should have. A more complete discussion of examination priorities can be found here and an overview of cybersecurity-related priorities here.

Aside from the SEC examination priorities, regulators globally will focus on sustainability, the transition away from LIBOR as a reference rate, changes in a post-Brexit world and the rise of digital assets, including monitoring for fraudulent offerings. In additions, as remote work because of the COVID-19 pandemic continues, regulators will look at how firms have handled issues related to business continuity, data protection, cybersecurity and third-party oversight.

In addressing regulatory and business priorities, compliance professionals can struggle with where to start. Here are some tips for getting started and staying on track:

  • Start small and get organized – get your folders and filing structures in place, especially for tracking activities like trade errors, marketing reviews and personal trading. Even the completion of small tasks like these can provide momentum and motivation to tackle larger projects.
  • Meet with other departments – reach out to leaders across the firm to understand their upcoming plans. How can you plan accordingly? How do their plans affect yours? Adopt an internal service provider mentality and make a point of checking in regularly to be a resource and see how you can help.
  • Set your compliance goals – balance the regulatory and business needs to set an action plan in motion. What do you want to accomplish this year? Goals aren’t just for other departments and new business. Look at your staffing and other resources to determine if you need more people, efficiency or technology. Consider opportunities to enhance training and make your compliance policies and procedures more concise and understandable.
  • Quantify and communicate your efforts – keeping track of compliance activities will provide a good measure of contribution to the business and provide a solid basis for evaluating the sufficiency of resources.

The demands of an advisory firm will always challenge a CCO to keep up. Having a plan for executing your compliance program can help a CCO stay on track, while reserving capacity to be an effective resource to the business.