In compliance with Rule 206(4)-7, the Securities and Exchange Commission (SEC) requires investment advisers to conduct annual reviews of their policies and procedures, ensuring the ongoing adequacy and effectiveness of the program. Although some firms perform reviews on a quarterly basis, it’s important to perform a comprehensive review of your compliance practices at least once a year to spot potential gaps and adapt to the evolving regulatory landscape and avoid violations.
Annual compliance reviews, when done currently, can be a lot of work, but that doesn’t mean you have to do it alone. Utilizing the experience and fresh eyes of an external consultant can help find gaps and offer solutions that your firm’s compliance team might not have.
Why investment firms should consider a compliance consultant to help run their annual review
During an annual compliance review, consultants review your investment firm’s regulatory compliance program. The core aim of an annual review is to test the adequacy and effectiveness of your compliance program in preventing violations of applicable federal and state regulations. During this review, your consultant can identify where policies and procedures need to be enhanced and whether additional policies and procedures need to be implemented to address risk within the firm.
Here’s how a compliance consultant can help your firm during an annual compliance review:
- Evaluate compliance, processes and records within your investment firm.
While your firm’s compliance program may spot and address gaps in its program throughout the year, it’s helpful to have an outside perspective. At National Regulatory Services (NRS®) company, our team of compliance professionals have decades of industry knowledge, serving as former chief compliance officers, legal professionals and regulators. Having one of our compliance consultants conduct your annual review broadens the scope of experience and expertise with which your program is built upon.
- Spot gaps in your firm’s regulatory compliance program.
As the leader of your compliance program, you are often in the day-to-day weeds, working with your team and the firm at large to remain in compliance. But this can sometime mean you don’t spot the gaps (small or large) in your program. Bringing in an outside expert can help shine a light on potential issues within your regulatory compliance program, so they don’t continue and cause serious harm to your firm and its clients.
- Provide actionable insights.
Good compliance consultants won’t throw regulatory jargon at you and then walk out the door. They’ll take the time to give you and your compliance team pointers on how to thoroughly fix the issue, and they’ll offer guidance which easy to understand, practical, actionable and cost effective.
- Build a culture of compliance.
Often, compliance consultants are former compliance professionals and regulators who know what it takes to build a robust compliance program. With decades of experience, compliance consultants can act as a true partner and resource for your firm, highlighting tactics to help you build and maintain an active culture of compliance.
- Keep a finger on the pulse.
Compliance consultants can offer continuous insight and applicable best practice solutions to tackle timely regulatory issues. With their pulse on the industry, and their depth of regulatory knowledge, compliance consultants amplify your compliance efforts and ensure you stay up to date with the latest industry alerts.
At NRS, we can help you meet regulatory requirements and remain in compliance while minimizing burdens on business processes. Let’s talk about how we can help with your annual review!