For compliance professionals at advisory firms, the annual review cycle is often a dreaded dance –
gathering mountains of paperwork, aggregating updates from regulators to assess impact on firm policies and procedures and attempting to fit what could be months of work into the allotted time frame.
On November 13, 2023, a set of amendments went into effect that require all SEC-registered advisers to document their annual compliance reviews in writing. In light of these changes and as the year comes to a close, annual compliance reviews have been top of mind for compliance professionals.
During a recent webinar, hosted by COMPLY, the audience of compliance professionals serving financial advisory firms were polled about when they conduct their annual review. The results?
Q1 – 22%
Q2 – 17%
Q3 – 2%
Q4 – 27%
Throughout the year – 27%
Never – 5%
Elevate your compliance program management with annual compliance reviews throughout the year
There has to be a better way right? Right. By spreading out annual review tasks over the entirety of the calendar year, instead of cramming it into the tail of Q4, firms can avoid the crisis of crunch time.
With frequent, bite-sized assessments throughout the year – which offer a wealth of benefits over the traditional “year in review” model – firms comply with regulatory requirements without overloading their team’s resources.
Here’s why ditching the yearly grind and conducting frequent reviews throughout the year is a game-changer:
- Real-time agility.
Forget catching up months later. Reviews throughout the year keep your finger on the pulse of compliance, identifying risks and addressing issues proactively. Think of it like preventative maintenance for your control environment.
- Targeted feedback.
Gone are the days of generic comments in yearly reviews. Frequent compliance reviews allow for focused feedback on specific events, behaviors or areas needing improvement. This precise guidance empowers employees to continuously refine their compliance practices.
- Continuous improvement.
Annual reviews tend to be backward-looking, evaluating what already happened. Compliance reviews throughout the year, however, offer a forward-looking perspective. By setting small, achievable goals in each review, you create a culture of constant improvement, constantly raising the bar on compliance excellence.
- Enhanced accountability.
When reviews happen more frequently, employees are naturally more mindful of their compliance responsibilities. The regular check-ins keep everyone accountable, fostering a culture of ownership and shared responsibility.
- Reduced regulatory risk.
By identifying and addressing compliance gaps early and often, you minimize the chance of major problems snowballing into regulatory headaches. Frequent compliance reviews act as an early warning system, preventing minor glitches from becoming full-blown crises.
- Boosted employee engagement.
Frequent feedback shows employees their contributions matter and that their performance is actively monitored. This reinforces their confidence and engagement in maintaining a robust compliance culture.
Ready to make the switch to compliance reviews throughout the year?
Doing this doesn’t need to be a herculean effort. Start by:
- Defining key compliance areas for regular evaluation.
- Developing concise review templates tailored to each area.
- Scheduling regular check-ins (quarterly, bi-monthly or even monthly).
- Promoting a collaborative, forward-focused approach to feedback.
Embrace this approach and watch your annual compliance reviews evolve from static a checklist to a dynamic safeguard. Remember, consistent oversight is one of the key parts of creating a culture of compliance at your firm. Let’s ditch the yearly grind and build a system that keeps us ahead of the curve, every step of the way – and we’ll help you do it!
Annual compliance reviews with COMPLY
Meet COMPLY! We offer tailored consulting and technology services to help you improve your compliance program management and create a culture of compliance at your firm.
The COMPLY Program Management solution provides compliance professionals with an integrated platform for managing their compliance program – making managing your firm’s annual compliance review much easier!
The platform includes the Annual Review Tool, which provides you with a guided, digital and documented Rule 206(4)-7 Annual Review. This tool aligns with regulations and comprehensively reviews and documents your firm’s compliance program, evaluating risk and identifying areas for improvement.
Too busy to DIY? Consider our Annual Review Service! Our compliance consultants offer hands-on guidance on your annual compliance review to help keep your firm on track with monthly check-ins, regular compliance testing activities and documentation of results.
Regardless of how your compliance team would prefer to conduct its annual compliance review, one thing is for sure: you cannot afford to fall behind. By choosing COMPLY, you gain a trusted and reliable partner who will help your firm comply with confidence.
Ready to elevate your compliance program? Let’s talk!