advisorassist compliance roi

Compliance ROI: Is Compliance a Cost or an Investment?

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About Us

© Copyright 2012 AdvisorAssist, LLC

Brian Lauzon, CFAManaging Principal

AdvisorAssist’s Mission

To foster and support entrepreneurship within the RIA industry and to help our clients increase their firm’s enterprise value.

Chris WinnFounder &

Managing Principal

Soluti ons across the Investment Advisor Lifecycle

3 Copyright 2011 AdvisorAssist, LLC

Start Up or Transitioning Advisors

• SEC & State Registration• Transition Planning• Operations & Technology

Planning• Marketing Planning &

Advertising Review

Established Advisors

Compliance & Regulatory• Ongoing Compliance Support• SEC to State Transition• Mock SEC & State Exam• Compliance Program Design• Outsourced CCO

COO & Practice Management• Strategic Planning• Sales & Marketing Planning• Social Media Strategy• Outsourced COO

4 © Copyright 2012 AdvisorAssist, LLC

Is compliance a cost and a burden…

If a commercial airline pilot said these things about FAA regulations, would you board their

plane?

“I just want to outsource regulatory matters so I don’t have to deal with them.”

“This is really just a necessary evil.”

“Regulations are a distraction from what I really want to be doing every day.”

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…or an opportunity to invest in and elevate your business?

• “Compliance for compliance sake” isn’t the answer

• Devoting “one day a quarter” to tend to compliance program often means that day will never come.

• Seek opportunities to weave compliance into daily activities

• Most compliance requirements are rooted in sound business practices

• Regulatory requirements provide opportunities to elevate the advisor’s game and unlock enterprise value in your business


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RIA Barriers to Growth

Source: Schwab 2011 RIA Benchmarking SurveyHow can this…

…help here!


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Opportunities to enhance your business through compliance program


1. Align business and compliance functions

2. Manage your firm’s risk

profile through strategic planning

3. Transform a mock exam into

a roadmap to success

4. Unlock hidden value in

your daily activities

5. Avoid the “guru effect”

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1. Align business and compliance functions

Ensure that your day-to-day technology tools support or fulfill required compliance activities

• CRM• Portfolio Management System• Trading

Conduct periodic due diligence on vendors and partners

• Typically results in a deeper understanding of vendor/partner capabilities

• Opportunity to capture more of what is available to you through vendors/partners


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2. Manage your firm’s risk profile through strategic planning

Planning mitigates operational, financial and regulatory risks

Business Continuity Planning (BCP)• Resumption of systems and key person risk• Develop a plan that helps you serve your clients easily and

without disruption

Succession Planning• Businesses have value that can be transferred• Clients usually don’t ask…but it’s on their mind

Technology Planning• Privacy and security• Remote access• Client access

Financial Planning• Historical (five years) balance sheets and income

statements can become baseline for YOUR financial planning

• Sales forecasting, budgeting, goal setting, pricing analysis


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3. Transform a mock exam into a roadmap to success

Two Ways to View a Mock Regulatory Exam


A checklist…

…or a roadmap

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Mock (and actual) exams begin with a request list that includes items like:

• Up- to-date list of “control persons”, “access persons” and IARs.

• Copies of most recent risk assessments

• Trading process documentation

• Internal review schedules

• Copies of advisory agreements

• Copies of fee schedules (including performance-based fees)

• List of all proprietary accounts

• Email and social media archives

• Copies of all advertising (marketing) materials


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On their surface, these items may appear simply as “must-haves” for regulatory exams, but they are also starting points for building a successful business.

• Confidence in your email/social media archiving and policies opens up new ways to promote your brand and engage with prospects and clients

• Documented processes improve your firm’s efficiency, scalability and transferability

• Centralized location for fee schedules creates opportunity to review or re-think your pricing strategy and service models


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4. Unlock hidden value in your daily activities


Regulatory oversight isn’t going anywhere. Why not seek ways to harness more value from it to help enhance your business?

Compliance activities can institutionalize your people, processes and technology and become a “business” rather than a “practice”.

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4. Unlock hidden value in your daily activities

Monitoring and Control Procedures• Procedures for identifying and escalating compliance issues can also be applied to

operations, technology or HR issuesInvestment Policy Statements (IPS)

• Viewed by some RIAs as too risky• Should really be viewed as protective of RIA• Trend is shifting towards formalizing investment process and codifying client goals

and guidelines in IPSClient Profiling

• Capturing clients’ personal balance sheet allows you to see their complete financial picture

• Identify opportunities to expand your relationshipsFinancial Books and Records Requirements

• Five years of financial statements can be repurposed as budgeting and financial planning tools

Advertising Books and Records Requirements• Maintain consistency among your team or offices by centralizing storage of collateral

and content (e.g. Firm profile, bios, key points of differentiation, values statement, social media profiles)

• Create cohesiveness by fostering unified messaging and branding


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5. Avoid the “guru effect”


Are you (or one of your colleagues) a “guru”?

Do you have any “go- to” people for things that do not add value to your firm or their career?

If you are the “guru”: Acknowledge, delegate, empower and reward

If a member of your team is a “guru”:

• Foster a culture where people don’t feel the need to hold on to responsibilities or “protect their turf”

• Seek outsourcing opportunities• Define roles and career paths (separation of duties)• Performance reviews• Cross-training

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Focusing on something often changes your initial perception


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Reframe your perception of compliance to see it as an investment rather than a cost.


• Improve coordination and cohesiveness among team members and offices

• Institutionalize procedures that will enhance your firm’s scalability, transferability and enterprise value

Enhance Enterprise Value

• Become less “people-dependent” and more “process- dependent”

• Build culture of “risk management”Reduce Risk

• Demonstrate a commitment to best practices that are in their best interests

• Identify opportunities to become their #1 “trusted advisor”

Deepen Client Relationships

• Incorporate your business practices into your firm’s messaging and branding

• Become a magnet for talentDifferentiate

Opportunities to Achieve Returns from Your Investment in Compliance

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We would welcome the chance to answer any additional questions now or at some point in the future.

Brian R. Lauzon, CFA Chris WinnPhone: 267-385-8861 Phone: 617.532.0925 [email protected] [email protected]

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