Episode 10: Considerations for Hiring an Outsourced Compliance Consultant

When considering potential compliance consultants for your investment advisory firm to partner with, there's some key considerations you should have in mind. Gebriela Birhane discusses what your firm should be looking for in their compliance consultant.

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Transcript:

Jennifer:

This is the CCO Buzz, and I’m Jennifer Greene, Marketing Strategist here at Core Compliance and Legal Services. With me today is our Operations Manager, Gebriela Birhane, who’s spent the last few months focusing on fine tuning our client experience. As a result, she’s with me today to talk about the main considerations that investment advisers should have when it comes to choosing a compliance consultant.

So Gebriela, what can you tell us about the priorities for choosing a consultant to work with an investment adviser?

Gebriela:

One of the very first priorities for most investment advisers is to work with a compliance consultant that’s focused on their needs. As Robert Boeche discussed in a CCO Buzz episode a couple weeks ago, the SEC is increasingly less forgiving when it comes to your compliance efforts being a cookie-cutter template. You can’t just settle for what gets handed to you from a big compliance firm.

Jen, will you include a link with that episode?

Jennifer:

Yeah, I sure can. Anyone listening who’s not on our website, or those who are on our website, this particular episode by the time you are hearing it will have a link in the transcript that’s there below the sound bite.

Gebriela:

Great! Anyway, as I was saying, the big focus for most firms needs to be on their specific needs. They’ll need to really look for a compliance consultant, or firm, that will spend the time to learn their business practices, and their business needs.

Jennifer:

Ok, so how do firms go about determining that a compliance consultant or firm is going to focus on them with that level of detail and service?

Gebriela:

This is very common sense, but the best thing to do is to talk to them. They should be asking you about your very specific compliance needs, and the consultant should be experienced enough to know what questions to ask.

Jennifer:

Alright, what other considerations should go into an investment adviser’s decision to hire a compliance consultant?

Gebriela:

There’s obviously an element of integrity – you’ll want to work with compliance consultants that genuinely has your business’s best interests at heart. A specialized team like the one here at Core Compliance can make a huge difference in how your firm is treated, how satisfied you are with your experience, and how confident you feel about standing up to regulatory scrutiny.

Jennifer:

Integrity is a hard quality to measure, especially these days, as meeting in person can be difficult to do. The best team for your advisory firm may not be local enough to you to easily conduct an office visit and meet people to get a sense of their integrity.

What suggestions do you have for investment advisers who want to scope out a potential compliance consultant but may not be able to do so in person?

Gebriela:

That’s actually a really great question Jen. Starting with a compliance consultant’s website is always a good idea. The firms that have their client’s needs at heart will provide information on their website that investment advisers can use as a resource. For instance, our consultants write regular risk management updates for the primary purpose of assisting clients and site visitors with hot regulatory topics.

Jennifer:

That’s a good point. I’ve talked with Tina Mitchell, our senior compliance consultant, at length about the very strict standards she and Michelle Jacko, the CEO, and actually the whole team, the very strict standards they hold our own site content to.

Gebriela:

Exactly, she and the rest of the team want to be sure that all blogs and risk management updates are informative and easy to understand for anyone who reads them, not just our current clients.

Jennifer:

Seems to me that’s how it should be. What else should an investment adviser be considering when looking for a compliance consultant?

Gebriela:

Well, an underlying theme in everything we’ve been talking about is that the consultant should be an investment adviser’s partner, not just handing them some document templates and calling it good. What we do is actually hold your hand throughout the entire process.

Compliance needs to be something that’s incorporated throughout an organization. The compliance consultant or team that your firm works with will need to really partner with your business to make that happen. If the compliance consultant you’re considering isn’t willing to spend the time to truly be a resource to your business, there’s a good chance you won’t be happy with the results.

Jennifer:

What about compliance packages, where there’s a list of services that the compliance consultant or team would provide, and the investment adviser just chooses the package that’s closest to what they think they need?

Gebriela:

To be honest, that often seems like a narrow viewpoint of how compliance services could or should be offered. It goes back to that idea that your compliance consultant should be a resource for your business, not that your business should just make do. Your business is unique, and no standard package will ever work for every business.

Jennifer:

Last, but certainly not least when it comes to what investment advisers consider when hiring an outsourced compliance consultant, I’m pretty sure price is a distinct factor in the decision process.

Gebriela:

Of course it is, and the right price point for each adviser is going to be different. That’s why a customized solution is such an asset for any adviser; they pay for what they need, not a package with services they don’t need and will never use.

A lot of people think ‘customized’ means expensive, but it doesn’t have to be. Sure, if your firm needs a complete overhaul of its entire compliance program, that’s not going to be cheap, by any means. But, if your firm only needs help revising its Form ADV, or conducting an annual review, and maybe an hour of consultation - that could be your custom solution, and chances are, that’ll cost you less than a package deal from a big box agency.

Jennifer:

That all sounds great to me. Is there anything else that you feel should be taken into consideration when selecting a compliance consultant?

Gebriela:

Yes, investment advisers should at least have a compliance consultant they feel comfortable calling to review their disclosures, manuals, regulatory filings, or any other documentation as it comes up. If an adviser hasn’t had a third-party consultant review their compliance program in at least the last year or two, they’re due have it looked over ASAP.

New or updated rules and regulations come out every year, multiple times a year, and it’ll be more cost effective for most firms to take a preventative approach to compliance, rather than a reactive one.

Jennifer:

Thank you so much for your time, Gebriela. If anyone listening has questions, or would like to learn more, I invite them to call us at 619.278.0020, or email us at info@corecls.com. A member of our team would be happy to help you out.  

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