Compliance Professional Yesterday, Today And Tomorrow

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  • PracticeHow you test, analyze a procedure.These are deliverables outlined in the initial rule – but how do you assess this? What are you doing now for your procedures that work . . .
  • What’s NOT on here: you don’t have to be perfect or right all the time
  • Compliance Professional Yesterday, Today And Tomorrow

    1. 1. Complinet Webinar<br />February 25, 2010<br />Ann Oglanian<br />President and CEO<br />ReGroup, LLC<br />Compliance Professional of Yesterday, Today and Tomorrow<br />
    2. 2. Speaker: Ann Oglanian<br />President and CEO of ReGroup, LLC, a San Francisco-based consulting firm <br />ReGroup provides strategic and tactical guidance to investment advisers, boards of directors, hedge funds and broker/dealers <br />Areas of expertise: strategic planning, organizational development, operation efficiency, risk management, compliance programs, executive recruiting<br />Over 20 years of professional experience in the financial services industry and a JD<br />2<br />©ReGroup, LLC 2010<br />
    3. 3. Agenda<br />The compliance profession: a review<br />Using yesterday and today to provide insight on tomorrow<br />Educated guesses and wish list<br />What can compliance professionals do to prepare?<br />Introducing a debate: <br />Is compliance a “Profession”? <br />Should it be?<br />3<br />©ReGroup, LLC 2010<br />
    4. 4. Trends<br /><ul><li>Enron, market timing, etc.</li></ul>Growing recognition of the cost of non-compliance<br />More regulation: CCO required<br />Financial crisis; Madoff<br />More regulation<br />Evolving compliance skills required<br />4<br />©ReGroup, LLC 2010<br />
    5. 5. Yesterday: the role of compliance<br />An afterthought <br />A second job for the office manager<br />Subordinate to the legal function<br />Overhead<br />Expectation = “Keep me out of jail”<br />5<br />©ReGroup, LLC 2010<br />
    6. 6. Today<br />Top of mind<br />Increasing recognition: the role is evolving<br />Redefinition of essential skill sets<br />Move to the executive office<br />A client of the legal function<br />Recognition of compliance its own budget line<br />Risk Management<br />De facto Chief Ethics Officer<br />Expectation: Competitive Advantage<br />6<br />©ReGroup, LLC 2010<br />
    7. 7. Stages of Compliance Program Development: Leadership Required<br />Tactical to Strategic<br /><ul><li>Set enterprise objectives
    8. 8. Coordinate analysis and action
    9. 9. Transparency into risk, exposure and performance
    10. 10. Identify and assess risks
    11. 11. Prioritize actions
    12. 12. Use technology for multiple purposes
    13. 13. Efficiency
    14. 14. Automation
    15. 15. Seeing connections
    16. 16. Plan future approach
    17. 17. Get it done!
    18. 18. Operate in isolation
    19. 19. Get resources from wherever</li></ul>Source: AMR Research<br />7<br />
    20. 20. Evolutionary Process<br />Other industries<br />More mature, more integrated<br />We’re going where they are already<br />Evolving: <br />Expectations<br />Compensation<br />Skill Sets<br />Management Mindset<br />Law vs. Compliance<br />Conflicts and Liability<br />The CCO’s Mindset<br />8<br />©ReGroup, LLC 2010<br />
    21. 21. 1. Expectations - Skills<br />Strategic and Tactical<br />Higher Profile<br />Management/Delegation<br />Communication<br />Business Analysis and Insight<br />Effective Use of Technology<br />©ReGroup, LLC 2010<br />9<br />Risk Assessment and Analytics<br />Ethics Management<br />Manage dilemma: The Opposable Mind <br />Tell the Truth<br />
    22. 22. Expectations – Delivering Value<br />More money for compliance<br />More compliance for the money<br />Use of specific priorities to drive deliverables<br />Measurable: moving toward evidence-based evaluation<br />10<br />©ReGroup, LLC 2010<br />
    23. 23. Overhead vs. Value-Added<br />Assist in protecting the firm’s reputation<br />Design a compliance program to meet regulatory requirements and improve internal efficiencies<br />Strengthen client relationships; improve sales and retention<br />11<br />Create transparency by packaging information in a manner designed to enhance decision-making <br />Reduce regulatory and business risks<br />Improve individual employees’ efficient execution of their compliance responsibilities<br />Interact, transact and integrate with vendors<br />©ReGroup, LLC 2010 <br />
    24. 24. 2. Compensation<br />Skilled compliance professionals are garnering higher salaries and higher corporate positions<br />Law degrees = a premium<br />Sources of information<br />Advice to CEOs: recruit and retain<br />12<br />©ReGroup, LLC 2010<br />
    25. 25. Hard skills: assumed<br />Know the rules, write policies and procedures, training, sanctioning, ethics, identify conflicts of interest, assess risk…<br />Soft skills make the difference<br />#1 Skill = Communication<br />The Market’s View: CCO Recruiters<br />13<br />©ReGroup, LLC 2010<br />
    26. 26. 3. Skill Sets<br />Greater skills are needed to support compliance programs: <br />Communication<br />Conflict Management<br />Strategic Planning<br />Complex Project Planning<br />Ethics and Telling the Truth to Power<br />Credibility<br />Knowing the business<br />Emergence of certification programs<br />14<br />©ReGroup, LLC 2010<br />
    27. 27. 4. Management’s Mindset<br />A greater understanding of:<br /> The need to resource compliance<br /> Getting the CCO involved in planning earlier<br /> A higher expectation of competitive advantage<br /> A higher expectation of executive leadership<br />A greater amount of focus and questioning: <br />Are we doing a good job?<br />How much is enough?<br />15<br />©ReGroup, LLC 2010<br />
    28. 28. 5. The Practice of Law vs. The Practice of Compliance<br />Tomorrow<br />Recognition that compliance is a unique function<br />Not subservient to the law; the law is a compliance tool<br />Lawyers interpret the law (what) and must focus upon protecting the firm<br />Compliance professionals implement (how), and create transparency<br />16<br />©ReGroup, LLC 2010<br />
    29. 29. The Practice of Law vs. The Practice of Compliance<br />Pfizer Corporate Integrity Agreement between The Office of Inspector General of the Department of Health and Human Services and Pfizer <br />The CCO shall not be, or be subordinate to, the General Counsel or Chief Financial Officer <br />17<br />©ReGroup, LLC 2010<br />
    30. 30. 6. Conflicts of Interest<br />Emerging realities of conflicts between compliance professionals and their firms<br />Emergence of ‘compliance counsel’<br />Awareness of need to protect from liability:<br />Premium on working for an ‘ethical’ firm<br />Insurance coverage<br />Indemnification<br />18<br />©ReGroup, LLC 2010<br />
    31. 31. 7. The CCO’s MindsetTHE MIND-SET OF THE TRUSTED PROFESSIONAL<br />Professionals have a bias for results.<br />Professionals don’t just try...they’re invested!<br />Professionals realize (and act like) they’re part of something bigger than themselves.<br />Professionals have standards that transcend organizational ones. <br />Professionals know personal integrity is all they’ve got.<br />Professionals aspire to be masters of their emotions; not be enslaved by them. <br />Professionals aspire to reveal value in others. <br />Professionals continue to learn throughout their careers.<br />19<br />© Wiersma & Associates<br />
    32. 32. Required By Law<br />The law gives the Compliance Program legitimacy and relevance…<br />The Compliance Program is the only risk management function that is required by law<br />You give the Compliance Program credibility.<br />20<br />©ReGroup, LLC 2010<br />
    33. 33. Setting StandardsExpectations for Compliance Professionals*<br />Be proactive, inquisitive, able to exercise professional skepticism, and able think critically <br />Contribute to the identification, assessment and mitigation of compliance risk<br />Assist in the creation of policies and procedures to address the identified risks<br />Properly and appropriately escalating compliance issues<br />Participate as appropriate in industry efforts to develop and implement good compliance practices for advisers<br />©ReGroup, LLC 2010 <br />21<br />Speech by Gene Goehlke, SEC, OCIE, 2005<br />
    34. 34. Setting StandardsExpectations for Compliance Professionals*<br />Conduct compliance responsibilities in accordance with the highest ethical standards<br />Demonstrate knowledge of the firm’s technical compliance requirements<br />Know the role of the compliance department;<br />Demonstrate knowledge of the business<br />Conduct compliance responsibilities in a consultative and professional manner<br />©ReGroup, LLC 2010 <br />22<br />Speech by Gene Goehlke, SEC, OCIE, 2005<br />
    35. 35. Should Compliance be a Profession?<br />A profession forms when:<br />Any trade or occupation transforms itself through the development of formal qualifications based upon education, apprenticeship, and examinations, the emergence of regulatory bodies with powers to admit and discipline members, and some degree of monopoly rights.<br />Law<br />Accounting<br />Medicine<br />Estheticians<br />23<br />©ReGroup, LLC 2010<br />
    36. 36. Gaps<br />Ethics<br />Conflict between the CCO and the Firm<br />Standards<br />Definition of the function<br />“Serving the Public”?<br />Liability<br />DOJ statements regarding ‘going after’ the gatekeepers, including compliance professionals who ‘should have known’<br />Credibility<br />24<br />©ReGroup, LLC 2010<br />
    37. 37. Pros<br />Recognizes the ‘practice of compliance’; builds credibility<br />A professional organization would: <br />Set standards of conduct<br />Advocate on behalf of members<br />Counsel professionals on ethical issues<br />Provide continuing education<br />Status: puts compliance on an equal footing with related professions – law, auditing, CFA<br />Support higher compensation<br />May engage academics to respond with programs<br />25<br />©ReGroup, LLC 2010<br />
    38. 38. Cons<br />It’s already a profession<br />Educational requirements might keep talented people out of the job<br />Expensive<br />Compliance is too varied for a single profession<br />Health Care<br />IA<br />BD<br />Unnecessary burden<br />26<br />©ReGroup, LLC 2010<br />
    39. 39. Regulatory Recognition<br />FINRA: Compliance Officer - Series 14<br />A qualification examination intended to insure that the individuals designated as having day-to-day compliance responsibilities for their respective firms or who supervise ten or more people engaged in compliance activities have the knowledge necessary to carry out their job responsibilities.<br />110 multiple choice questions; 3 hours testing time. <br />Required by the New York Stock Exchange.  <br />27<br />©ReGroup, LLC 2010<br />
    40. 40. Where do we go from here?<br />Will these patterns continue?<br />How should compliance professionals prepare?<br />Keep learning the business<br />Develop skills – purposefully<br />Focus on insight vs. information<br />28<br />©ReGroup, LLC 2010<br />
    41. 41. Ann Oglanian<br />aoglanian@regroupllc.com<br />415-681-2230<br />29<br />Thank You<br />

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