Compliance is a big undertaking for registered investment adviser (RIA) firms large and small – the costs, time commitment, constantly evolving regulations and jargon-heavy language adding to the complexities of navigating regulatory compliance successfully. Yet, it’s an unavoidable and critical part of financial services.
For many, the answer to these obstacles is an RIA compliance consultant, or a professional who specializes in regulatory compliance issues. Some firms hire in-house compliance consultants, while others bring in these specialists to help during especially difficult or transitory times.
Related: Does Your Investment Firm Need a Regulatory Compliance Consultant?
Whether you’re considering hiring a compliance consultant for a brief stint or an ongoing partnership, it’s important to think about how a consultant can best benefit your firm. To help you in your decision-making journey, we’ve outlined 13 of the main reasons RIAs hire a compliance consultant.
13 reasons to hire an RIA compliance consultant
1. Keep up with regulatory compliance changes
Compliance regulations are constantly evolving, and keeping up with all the nuances involved in those changes can be time-consuming. This is especially true given that the SEC has a jaw-dropping 30 rules updates on the books for consideration in 2023.
Rather than taking the time to go through each of those potential pieces of legislation one by one, a compliance consultant can help your firm efficiently stay updated and ensure that your policies and procedures align with the current regulatory environment.
2. Register your RIA firm
If you are new to the industry, one of your first tasks is registering your advisory firm with the appropriate regulatory body. Leaning into the support of experienced compliance consultants can help ensure you don’t miss any critical step in the process.
3. Help you run your annual compliance review
Annual compliance reviews are essential for assessing the effectiveness of your firm’s compliance program – and they’re required by law for all SEC-registered RIAs.
But it takes time and experience to craft an efficient and effective annual review meeting. A compliance consultant can guide you through this process, helping you identify any gaps or areas of improvement.
Click here to download our free RIA Annual Review Checklist
4. Help you run mock audits
Preparing for regulatory audits can be daunting. COMPLY’s Chief Regulatory Officer, John Gebauer, estimates that the SEC examines 10-15% of registrants each year – which means your firm will statistically be chosen for an audit every six to seven years. However certain risk areas may push your firm higher on the list of examinations.
A compliance specialist can help you conduct mock audits, simulating the real audit process, to identify potential weaknesses and address them proactively.
5. Fine-tune your policies and procedures to your firm
The best compliance programs don’t just rely on cookie-cutter approaches and templates. It’s important to take your compliance a step further and tailor policies and procedures to your firm’s specific areas of risk.
With the fresh perspective of a compliance consultant, your firm can successfully craft policies and procedures that address your firm’s unique needs.
6. Boost your RIA cybersecurity practices
Cybersecurity has been a hot item for the SEC for a while now. Back in 2022, the regulatory body proposed what’s known as the Cybersecurity Risk Management, Strategy, Governance and Incident Disclosure, which would require firms to report cybersecurity incidents within four days of their discovery – and that’s just one of many proposed changes to cybersecurity rules.
Clearly, cybersecurity shouldn’t be taken lightly – and with a compliance consultant’s help, your firm is better equipped to identify vulnerabilities and craft robust preventative practices.
Related: Do’s and Don’ts of RIA Cybersecurity Best Practices
7. Provide guidance on RIA advertising and marketing
If your firm still has questions about the recently implemented Marketing Rule, you’re not alone.
Related: The SEC’s New Marketing Rule is Now in Effect. Let Us Help!
Luckily, a compliance consultant’s job is to know all the ins and outs of SEC marketing and advertising regulations. With a consultant on your team, you can feel confident in your marketing, remain compliant and effectively reach your target audience.
8. Increase client trust
The foundation of financial planning is clients. While your services revolve around building portfolios and building investment plans, the other half of that equation is client relationships.
And your clients want to know that you take compliance, security and data protection seriously. An SEC fine is not a great look on your record. Having a compliance consultant on your team can help increase their confidence in your firm’s practices, policies and procedures, further developing their trust in your firm overall.
9. Free up time to focus on your clients
Everyone knows that compliance can be costly, in terms of both money and time.
It’s been estimated that advisers spend an average of one-third of their time on compliance activities – time that could otherwise be spent engaging with clients or nurturing prospects.
With the addition of a compliance consultant, you can reduce your chances of expensive compliance errors while freeing up your time to focus on delivering better experiences for your clients.
Related: Click here to download the 2023 CCO Playbook
10. Create efficient and compliant client onboarding
Efficient client onboarding processes are essential for a positive client experience.
A compliance consultant can help streamline your onboarding procedures through standardization, ensuring compliance while reducing unnecessary delays and paperwork along the way.
11. Emphasize your culture of compliance
Building a culture of compliance is vital for fostering ethical conduct within your firm. A compliance consultant can assist in developing training programs, communication strategies and monitoring frameworks to promote a strong culture of compliance among your employees.
Plus, the presence of a compliance consultant on your team sends a clear message throughout the firm: You take compliance seriously, and are willing to invest in positive compliance outcomes.
12. Ensure your third-party vendors are up to snuff compliance-wise
Third-party tech vendors play a significant role in your operations – they make up your CRM, marketing tech, trading platforms and so on. They’re embedded in how your firm operates on a daily basis.
A compliance consultant can help you assess the compliance practices of your current vendors, ensuring they meet necessary regulatory standards. A consultant can also help you choose new vendors when it comes time to update or expand your tech stack.
13. Increase insight into state- and local-level regulations
To further complicate compliance – your firm may have state and local regulations in addition to federal regulations. An experienced consultant can help your firm navigate and comply with these additional regulatory frameworks as you scale your practice.
Boost Your Compliance with RIA in a Box
Ready to take your compliance up a notch? Click here to download our 2023 CCO Playbook and access current regulatory trends, tips to make the most of your compliance resources, major insights to have on your radar and more.