As we all know in the compliance and financial services industries, as a registered investment adviser or as an employee of the adviser, you have a fiduciary duty to put your clients’ interests ahead of your own.
But as a Chief Compliance Officer, how do you ensure that this duty is echoed within your compliance program as well as the corporate culture that is woven across multiple departments that service your clients throughout your firm? And, when you are onboarding new talent, how do you establish the expectations and company approach to meeting this fiduciary obligation?
Below are eight key considerations for training and communication – and these are integral components to thriving firm operations and effective onboarding.
- Create a policy requiring new employees to complete an initial compliance training session. This training should be designed to review and discuss your firm’s compliance policies and procedures as well as the Code of Ethics. Upon completion, employees should execute an attestation or certification to document their understanding of the policies and the Code.
- Depending on your firm’s service offerings and business model, organizations should also offer subject matter-specific training for high-risk business areas (e.g., Sales, Portfolio Management, Trading) that focuses on the unique risks of the work involved in those areas.
- During onboarding, companies should ensure that all of their compliance policies and procedures are easily accessible to their employees, for example through an intranet or dedicated online files. As part of the training, firms should address where employees can find the policies and procedures and/or Code of Ethics for future reference.
- Your compliance program should include a regular training schedule for employees and the content should cover not only the fundamentals of your compliance program, but also address a variety of hypothetical compliance issues that may arise at your firm. We strongly recommend taking a risk-based approach in determining which specific subject matters to focus on based on the nature of your firm’s business model.
When Enhancing and Coaching Your Team
- As in any industry, financial services firms should stay abreast of business model changes or developments within the industry. Because regulators are proposing and implementing new rules on a fairly regular basis – and often issuing guidance regarding such rules – firms should require a mandatory firmwide annual compliance training session, covering not only new rules and regulations, but also to address the high-risk areas of the firm’s business that were identified during previous annual reviews, risk assessments, and regulatory exams.
- To engage in effective communications regarding your business’ compliance risks or gaps, you should create an open forum in which to discuss regulatory matters and SEC enforcement actions that are applicable to the firm’s business model, employee interaction, and services (e.g., insider trading, Code of Ethics etc.). You can also consider establishing a confidential, internal “help” line for employees to utilize for purposes of privately raising concerns, whether compliance-related or otherwise, to the Chief Compliance Officer or another appropriate executive.
- Pertaining to industry updates and regulatory news, firms could also implement a periodic compliance newsletter that provides a digestible download of industry hot topics and new regulatory guidance.
- To make these compliance discussions something to look forward to, consider holding annual focused training or educational events for specific teams that are subject to specific business and compliance risks and thus are more heavily regulated, for example, the investment team, the marketing group, and salespeople. This training event could be hosted by an industry expert, a trade association, or an outsourced compliance partner that could provide specific insight to compliance needs within your firm.
By incorporating these eight components at your firm, you will help enhance the foundation to your compliance program and strengthen the compliance culture from the top of your organization. At Core Compliance & Legal Services, Inc. (“Core Compliance”), we’ve assisted firms with establishing a culture of compliance for every phase and growth stage of their business. Whether it’s providing an Outsourced Chief Compliance Officer or providing a suite of compliance support services to an in-house CCO, Core Compliance is equipped to handle your needs.
For more information or to discuss your firm’s approach to onboarding, training, and establishing a culture of compliance, contact the team at Core Compliance today.