It has been a year since my last blog entry, and so much has happened in the industry. From the DOL ERISA fee disclosure requirements (408(b)(2) Regulation) to Private Fund registration (Form PF), regulators have undeniably pushed compliance to the forefront of financial services. A department that once took a backseat to the sales force is now considered one of the fastest-growing sectors of the industry.
Compliance as a Bridge
The regulators view compliance as a bridge — a mechanism to safeguard investor assets from fraud. The SEC and FINRA's regulatory actions against firms will continue to reinforce the importance of maintaining a robust compliance program. The message is clear: compliance is no longer optional infrastructure.
"A department that once took a backseat to the sales force is now considered one of the fastest-growing sectors of the industry."
The Rise of Outsourced Compliance
A growing number of firms have come to the realization that compliance is a resource they need — and should actively leverage. Every year, the compliance budgets these firms set aside are increasing. And rather than hiring a full-time, in-house compliance officer, most firms are discovering that outsourcing compliance delivers both cost savings and greater depth of expertise.
Outsourced compliance is not a shortcut. Done well, it means your firm has access to professionals who are dedicated to tracking regulatory changes, conducting reviews, and ensuring your program stays current — without the overhead of a full-time hire.
Three Pillars of a Sound Compliance Program
To ensure your compliance program stays up to date, consider the following:
- Stay current with regulatory rules and enforcement actions
- Conduct a forensic review of your compliance program regularly
- Document every action taken to address compliance-related issues
Above all else, remember that a sound compliance program rests on three critical factors:
Insight. Review. Action.
Without insight into your regulatory environment, you cannot identify gaps. Without review, you cannot confirm that your program reflects current requirements. And without documented action, no review truly counts. Together, these three principles form the backbone of a compliance program that is both defensible and effective.