A Registered Investment Adviser (RIA) must meet regulatory requirements to maintain compliant practices. As businesses grow, RIAs need a compliant program that adapts as operations change and compliance risks evolve. Regulatory consulting firms provide RIAs with oversight through CCO and cybersecurity services; they can also conduct annual reviews to verify regulatory standards are met. Here is more information on preparing firms and advisors for regulatory growth and increased oversight through RIA compliance services:
Compliant Program for Business Growth
Compliant programs that were created for small RIAs may not address changing regulatory obligations and risks. When RIAs change the number of states they serve and the technology they offer, they need to update policies to support more complex processes. This may include transitioning from a manual fee-billing process to an online system. RIA compliance services help firms manage growth in clients and AUM (Assets Under Management). Use these services to formalize the review and approval process for accepting new clients. Regulatory consultants also help update written policies that involve changing AUM, so firms maintain accurate records and books.
Managing a small internal team may be a simple process, but adding several members means addressing new compliance challenges. Some firms need additional help to facilitate the onboarding and training process. Consultants can help with managing personal securities transactions, conflicts of interest, and supervision requirements.
Scalable CCO Role for Oversight
A Chief Compliance Officer (CCO) oversees the compliant program. Growing RIAs may need additional insight or assistance with managing regulatory compliance, which helps make sure their program is current and actionable. Outsourced CCOs are able to scale their services to meet a few needs or provide full oversight; they help with:
- Regulatory disclosures and filings
- Compliance monitoring and testing
- Code of Ethics administration
- Marketing and advertising review
Regulatory disclosures include Form ADV, which is required for all firms filing with either state regulators or the Securities and Exchange Commission (SEC). Firms must fill out their regulatory data and detail their conflicts, services, fees, and more. The compliance program should be regularly monitored and tested to keep policies current as the business grows. A Code of Ethics addresses various aspects, such as personal trading and reporting obligations. Expanding RIAs also need to review marketing and advertising, and a CCO helps create a formal process to address these and keep records accurate.
Annual Review To Manage Compliance
RIAs are required to have annual compliance reviews; these help identify weaknesses. They also allow businesses to change their written policies and procedures to avoid issues. The annual review is not a standard test, as it is customized to address a firm’s specific business model and client base. Compliance services help make sure that any new services or investment strategies are included in revised programs. Outsourced compliance professionals conduct reviews using their knowledge of regulatory obligations. They provide accurate recordkeeping and proactive approaches to maintain compliance.
Some regulatory consultant services offer mock exam support, which simulates real reviews and audits. This enables RIAs to address compliance issues so they are prepared for the actual annual review. Consultants help RIAs understand how regulators will assess their program in the review, allowing them to make changes to internal controls for enhanced compliance. Firms can build more effective compliance programs to mitigate risks and adapt to policy changes as they grow.
Adaptable Cybersecurity To Meet Regulations
Cybersecurity provides additional protection for growing firms, and it should be monitored consistently to make sure client information stays secure. This involves penetration testing and risk assessments, which help RIAs fix compliance gaps to avoid leaving accounts vulnerable. Firms with IT teams that work closely with cybersecurity compliance consultants are better positioned to effectively train employees about appropriate procedures and keep accurate, current records of tests. The infrastructure for cybersecurity can be adapted to meet a firm’s needs, such as:
- Managing employee access systems
- Creating secure remote access
- Coordinating third-party vendors
Look for RIA Compliance Services
RIA compliance services provide firms with actionable oversight, allowing them to update procedures and reflect them in current programs. Regulatory growth requires RIAs to have their compliance and cybersecurity programs annually tested, so potential risks are addressed early, preventing future issues. Contact a regulatory compliance consultant today to use their compliance and outsourced CCO services.
