Whether you’re a seasoned compliance professional or just getting started in the industry, one of the biggest hurdles you may encounter is aligning senior management with compliance.
At Core Compliance & Legal Services, Inc. (“Core Compliance”), we often hear “if it doesn’t make us dollars – it doesn’t make sense.” Simply put, compliance is often seen by C-Suite level executives at registered investment advisers merely as an added expense rather than the necessity it is.
We understand how intimidating it can be for Chief Compliance Officers, no matter how experienced, to enforce policies and procedures, change protocols, and earn the respect of firm personnel, in particular from senior managers. Notwithstanding this hurdle, buy-in from senior management, and their continued support, is essential to establishing the foundation to building your firm’s culture of compliance.
Below are four steps to start your journey to align the C-Suite with compliance.
Where to Start
Even for an experienced RIA or BD Chief Compliance Officer, demonstrating the importance of compliance to the C-Suite and building that “Tone from the Top” approach can be challenging. In fact, in a 2020 speech, Peter Driscoll (then SEC OCIE Director) noted that when CCOs are part of integral discussions and have strong communications with firm executives, senior management was more inclined to lead by example when it came to compliance and supporting the CCO’s compliance initiatives.
- Compliance deserves a “Seat at the Table.” We aren’t talking about a compliance-related agenda item or an occasional invitation to a management meeting – we are talking about a regular seat, reserved for compliance at any and all standing committees and meetings that may impact the firm, its business practices, and its service offerings. You may be thinking – that’s a lot of meetings – but having compliance as part of the conversation from the onset helps establish the importance of the compliance voice. CCOs have an operational vantage-point that can provide valuable insight and guidance when it comes to growth strategy and achieving firm objectives in a manner that effectively navigates our industry’s complex regulatory landscape.
- It’s all in the messaging. Rarely do employees skip over an email that comes from the senior management team or a specific C-Suite executive. Understanding this, firm management should utilize every opportunity when communicating with employees to incorporate compliance considerations when discussing the company mission. Consistency with messaging is also integral to this best practice, as it will reaffirm the business’s expectations and commitment to servicing clients within the confines of fiduciary obligations. Whether in a quarterly email from the C-Suite or a holiday message from the President/CEO, a nod to the importance of compliance goes a long way toward establishing a “Tone from the Top.”
- Delivery is Key. As in any industry, new rules, enforcement actions, and regulatory guidance are provided regularly – but how are firms ensuring that the latest regulatory updates are being communicated throughout the company? Enter “Management Communications.” While senior management is included in the creation, adoption, and implementation of new processes that impact the business, the C-Suite should also be involved in the notification and resolution of violations of firm polices, rather than only rely on compliance personnel to be the proverbial bad guys. By having the C-Suite working collaboratively with Compliance on these matters, the entire company will recognize that the firm is laser-focused on its culture of compliance.
- Participation and Training. Employee training is an important part of any compliance program, but to foster greater respect for the firm’s culture, having senior management attend and participate in these sessions can go a long way toward demonstrating the significance of your compliance program. Seeing the commitment to compliance in person at that level echoes how essential compliance is to your brand.
If you’re interested in hearing more about how the professionals at Core Compliance can work with you to help align your compliance culture with your C-Suite executives’ priorities, we encourage you to reach out. Our consultants have extensive knowledge of and experience in advising firms on how to create and/or maintain a strong culture of compliance, as well as providing comprehensive compliance training to firm employees. Contact us today at (619) 278-0020 or click here to schedule a call.