Meeting your compliance requirements is one of the core components of operating an advisory firm. Yet, because of just how quickly the regulatory environment changes, it’s not uncommon for firms to outsource the majority of their compliance-related responsibilities to a Regulatory Compliance Consultant.
Not only do rules and regulations change often, but the sheer amount of them can be overwhelming for firms of any size.
Related: Why Do RIAs Need a CCO? 10 FAQs About the Importance of RIA Chief Compliance Officers
If you’re thinking about reaching out to a Regulatory Compliance Consultant, you likely have questions about their role, services, and benefits. Explore the following guide to determine whether an outsourced consultant is right for your firm, what they can do for your firm, and more.
Why Work with Regulatory Compliance Consultants?
To start, let’s take a closer look at who Compliance Consultants are and why they’re a valuable asset to financial advisory firms, RIAs, broker-dealers, private equity firms, hedge funds, and more.
Who are Compliance Consultants?
A Compliance Consultant is an expert in compliance, helping financial firms navigate the regulatory landscape while remaining up-to-date with the most recent rulings. They are able to help firms operate in accordance with regulators including the Securities and Exchange Commission (SEC), Financial Conduct Authority (FCA), state regulators, the Financial Industry Regulatory Authority (FINRA), and others.
The Importance of Compliance Consultants
Compliance Consultants can be instrumental in shaping your firm’s compliance program, as well as identifying and addressing potential regulatory risks.
More specifically, Compliance Consultants can:
- Identify and mitigate risk: The SEC, FCA, FINRA, and state regulators don’t hold back from fining firms for operating out of compliance. Unfortunately, these violations (whether knowingly or unknowingly committed) can result in serious penalties that have the potential to greatly impact a firm’s reputation. A Regulatory Compliance Consultant is able to leverage their deep expertise to proactively identify and address risks specific to your firm’s processes, systems, and personnel.
- Save your firm time: Even with an internal compliance team, compliance-related tasks can be especially time-consuming. From creating and updating your program to monitoring employee activity, researching new rulings, addressing potential violations quickly, and training employees regularly – it’s possible tasks and responsibilities may slip through the cracks.
- Track regulatory changes: One of the biggest advantages of working with a Regulatory Compliance Consultant is their ability to stay ahead of the curve when regulations change and help your firm adjust as needed. Their proactive guidance can help you avoid those rushed, last-minute updates and ensure you’re on track for compliance success year-round.
What Services Do Compliance Consultants Provide?
With some background info on who Compliance Consultants are, let’s switch focus to what services they actually provide financial firms.
What Core Services Do RIA Compliance Consultants Provide?
Generally speaking, Compliance Consultants help firms by creating, implementing, and regularly adjusting effective and comprehensive compliance programs customized to address their unique concerns.
In doing so, they help their clients adhere to regulatory requirements while avoiding fines and penalties.
In addition, Compliance Consultants can assist with:
- Internal audits/mock exams
- Regulatory filings
- Minimizing conflicts of interest (such as personal trading)
- Due diligence on third-party vendors like cybersecurity teams and other outsourced IT companies
- SEC and FINRA registration
- And more
Additional Services
In addition to their primary duties, consultants will often take on additional responsibilities (especially if the firm doesn’t have an internal compliance team).
Some examples include:
- Capturing and archiving all firm and employee communications
- Monitoring political contributions and other outside business activities (OBA)
- Executing tasks related to compliance program management
- Assisting in training related to continuing education, anti-money laundering, becoming an investment advisor representative, and more
The Selection Process: Finding the Right Regulatory Compliance Consultant for Your Firm
If you find that working with a consultant is the right choice for your firm, you’ll need to know how to find one that best fits your needs.
Key Considerations when Choosing a Compliance Consultant
As with any other service provider, it’s important to do your research and due diligence first – especially when trusting another professional with something as critical as your compliance program.
As you vet your options, here are a few ways to identify potential partners:
- They have expertise and experience in the financial industry.
- Their available services are varied and comprehensive.
- They’re able to provide reviews and testimonials from previous clients.
The success and longevity of your firm depend on your ability to develop, implement, and closely monitor employee participation. But with so many other responsibilities and client-facing tasks filling up your plate, it’s possible compliance may fall on the back burner. An RIA Compliance Consultant can help create and manage your firm’s compliance program, while proactively identifying and addressing potential violations or risks.
Looking for a Regulatory Compliance Consultant?
Want an experienced Regulatory Compliance Consultant in your corner? Click here to learn more about COMPLY’s Expert Compliance Consultants and book a demo with our team today.
This guide is designed to provide an in-depth overview of the role and necessity of a Compliance Consultant for advisory firms. However, each firm may have variable needs and should consult directly with a compliance professional for advice tailored to their unique situation.