Managing an advisory firm's compliance program can be costly. Can this expense also be viewed as an investment? Learn how your compliance efforts can help you manage your firm more effectively.

1. Compliance ROI: Is Compliance a Cost or an Investment?

2. About Us
Chris Winn Brian Lauzon, CFA
Founder & Managing Principal
Managing Principal
AdvisorAssist’s Mission
To foster and support entrepreneurship within the RIA industry and to help
our clients increase their firm’s enterprise value.
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3. Solutions across the Investment Advisor Lifecycle
Start Up or Transitioning Established Advisors
Advisors
• SEC & State Registration Compliance & Regulatory
• Transition Planning • Ongoing Compliance Support
• Operations & Technology • SEC to State Transition
Planning • Mock SEC & State Exam
• Marketing Planning & • Compliance Program Design
Advertising Review • Outsourced CCO
COO & Practice Management
• Strategic Planning
• Sales & Marketing Planning
• Social Media Strategy
• Outsourced COO
3
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4. Is compliance a cost and a burden…
“I just want to outsource
regulatory matters so I don’t
If a commercial airline pilot said these things about
have to deal with them.”
FAA regulations, would you board their plane?
“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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5. …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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6. RIA Barriers to Growth
…help here!
How can this…
Source: Schwab 2011 RIA Benchmarking Survey
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7. Opportunities to enhance your business through compliance program
1. Align
business and
compliance
functions
2. Manage your
firm’s risk
5. Avoid the
profile through
“guru effect”
strategic
planning
4. Unlock 3. Transform a
hidden value in mock exam into
your daily a roadmap to
activities success
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8. 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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9. 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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10. 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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11. 3. Transform a mock exam into a roadmap to success
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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12. 3. Transform a mock exam into a roadmap to success
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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13. 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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14. 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 issues
Investment 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 IPS
Client Profiling
• Capturing clients’ personal balance sheet allows you to see their complete financial
picture
• Identify opportunities to expand your relationships
Financial 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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15. 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 • Foster a culture where people don’t feel the need
team is a “guru”: 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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16. Focusing on something often changes your initial perception
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17. Reframe your perception of compliance to see it as an investment rather
than a cost.
Opportunities to Achieve Returns from Your Investment in Compliance
• Improve coordination and cohesiveness among team
members and offices
Enhance Enterprise Value • Institutionalize procedures that will enhance your firm’s
scalability, transferability and enterprise value
• Become less “people-dependent” and more “process-
Reduce Risk dependent”
• Build culture of “risk management”
• Demonstrate a commitment to best practices that are in
Deepen Client their best interests
Relationships • Identify opportunities to become their #1 “trusted advisor”
• Incorporate your business practices into your firm’s
Differentiate messaging and branding
• Become a magnet for talent
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18. We would welcome the chance to answer any additional questions now or at some
point in the future.
Brian R. Lauzon, CFA Chris Winn
Phone: 267-385-8861 Phone: 617.532.0925
blauzon@advisorassist.com cwinn@advisorassist.com
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