The Securities and Exchange Commission (SEC) requires each firm to appoint a Chief Compliance Officer (CCO) – one member of their team to take charge of regulatory compliance matters.
But for many registered investment advisory firms (RIAs) with smaller teams, a full-time CCO simply doesn’t make sense. In fact, it’s been reported that “less than 10% of RIAs with fewer than $250 million in AUM have a full-time dedicated CCO.”
So, what do the other 90% of RIAs do?
For many, a double-duty CCO is the answer: An internal individual – likely already familiar with the firm’s practices – who can take over the CCO role in addition to their other job responsibilities.
And while the job function of a double-duty CCO is essentially the same as a regular, full-time CCO, those pulling double-duty with multiple job titles often need a unique set of skills for success. Today, we’re exploring seven essential skills you’ll need as a double-duty CCO to implement an efficient and effective compliance program.
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Seven essential skills for double-duty Chief Compliance Officers
1. Clear communication
Since compliance is integral to each level of your firm, you will likely need to interact with many (if not all) members of your organization on a regular basis. With several job functions on your plate, the ability to quickly and efficiently communicate with others is a must.
Related: Why Do RIAs need a CCO? 10 FAQs about the importance of RIA chief compliance officers
As regulations change, policies and procedures are updated and your firm grows, you will also need strong written and verbal skills to lead training initiatives for other employees (who already have plenty of other things on their plate).
2. Organization and time management
Holding two separate job titles will test both your organizational and time management skills. As a double-duty Chief Compliance Officer, you will need to be able to look at a list of to-dos related to both job functions and quickly prioritize tasks.
It may be beneficial for you to “block” time for each job. For example, if you operate as both your firm’s CCO and a practicing adviser, you could set aside time twice a week to focus solely on compliance-related responsibilities.
3. Taking Initiative
You’ll need to have an eye on everything that is going on at the firm, so if you see someone working outside of the approved policies and procedures, it’s important that you be willing to step in and reinforce the way things are supposed to happen.
That’s why double-duty CCOs often hold a high-level, executive position as their “other” job role. Such positions give a wide view of company structure, as well as built-in authority to address compliance issues.
4. Delegation
It’s a common (and unfortunate) misconception that CCOs are solely responsible for a firm’s compliance.
CCOs are responsible for adopting and implementing written policies and procedures designed to prevent violations of the Advisers Act – but that doesn’t mean you have to complete all those associated tasks on your own!
Although each CCO is charged with spearheading compliance, adhering to regulations should be intertwined with each person’s job function. In instances where you are pulling double-duty with another job function, a firm-wide culture of compliance becomes even more critical.
Essentially, you will need to be comfortable with delegating tasks as necessary, both to maintain your schedule and to keep compliance on track.
5. Adaptability
The SEC’s Investment Advisers Act of 1940 states that a CCO’s core responsibilities include a “working knowledge of compliance regulations.”
However, compliance is not a simple, static responsibility – just as regulations change, new tools become available and your firm’s structure evolves. With each changing tide, your approach to compliance will need to adapt and find new solutions that best fit your RIA’s needs.
Related: How to Choose the Right Chief Compliance Officer for Your RIA Firm
6. Technological know-how
The sheer amount of compliance needs within RIAs makes it virtually impossible for a CCO to tackle every compliance request or requirement without some form of technology solutions. Luckily, there is an ever-growing library of tech integrations out there that can aid in aggregating data, flagging potential violations and more.
As you will likely need to work regularly with these software programs (and possibly train other staff on their functionality), integrating a technology solution built with the end-user in mind is critical.
7. Crisis management
The SEC doled out 760 fines in the 2022 fiscal year, totaling more than $6.4 billion in penalties. With that in mind, it’s important to understand that compliance errors can and do occur. As CCO, you need to feel confident in your ability to appropriately respond to those errors – your actions in those moments could be the difference between a costly penalty and a minor setback.
When crises do happen, you’ll need to stay calm under pressure, leading your team, clients and stakeholders to a proper solution.
Related: The RIA’s Guide to Cybersecurity Incident Response Plans
If you’ve been appointed as a double-duty CCO within your firm, these seven skills offer a great guideline for your decision-making process, while also giving you an outline for further training and growth opportunities.
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