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Strategic Planning For Compliance
The document summarizes a presentation by Ann Oglanian of ReGroup, LLC on strategic planning for compliance. It discusses the five steps of strategic planning: 1) identifying issues and risks, 2) prioritizing issues, 3) matching objectives to risks, 4) identifying necessary resources, and 5) identifying costs of initiatives. It emphasizes translating strategic planning to speak the business's language, setting expectations for compliance professionals, and measuring progress to demonstrate the value of compliance.
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Strategic Planning For Compliance
- 1. Chicago Compliance Group February8, 2010 Strategic Planning for Compliance Ann Oglanian CEO and President ReGroup, LLC
- 2. The Problem How do we get it all done? g How do I get some help? The Solution Translated strategic planning Connect to the business Speak their language ReSet Expectations ©ReGroup, LLC 2010 2
- 3. Presentation Overview Part One • Why do strategic planning? • The 5 Step Process for Planning Part Two • Strategic Planning Part Three: • Getting Buy-in • Meas ring progress Measuring Part Four: • Discussion – identifying and communicating the value of compliance ©ReGroup, LLC 2010 3
- 4. There is nothingso useless as g doing efficiently that which should not be done at all. all ~Peter F. Drucker ©ReGroup, LLC 2010 4
- 5. YOU Success is Linked Compliance Program Your Firm The Industry Regulation ©ReGroup, LLC 2010 5
- 6. Your Skill Set Actual vs Perceived vs. Technical skills get you in the game; conducting yourself professionally leverages your chances of winning #1 Problem area: Communication skills How can strategic planning increase your credibility ©ReGroup, LLC 2010 6
- 7. The Mindset Why and how to define your job What does success look like? • • • • What d Wh t does it mean to become an effective t b ff ti compliance professional? How do you measure success? ©ReGroup, LLC 2010 7
- 8. Time Analysis: Current(%) ©ReGroup, LLC 2010 8
- 9. Matching Allocation toPriorities ©ReGroup, LLC 2010 9
- 10. Why Do StrategicPlanning? Powerful tool to help define your own success Effective execution and measurable results Focus on the right issues Create consensus Credibility: • Holding yourself to a high standard of accountability • Effective commutating in “CEO” Create C t a competitive advantage for your firm titi d t f fi Make a strong (and successful) argument for resources ©ReGroup, LLC 2010 10
- 11. Why Create aWritten Document? Credibility Measurability Clarity – basic management and discipline Evidence – to meet the “show me” standard show me To share with others ©ReGroup, LLC 2010 11
- 12. Who are YourConstituencies? Internal Clients • Supervisory functions/Business Units Control groups Management Compliance Steering Committee Compliance staff Regulators Shareholders Sh h ld ©ReGroup, LLC 2010 12
- 13. Using Your Constituenciesfor Planning Information Gathering Phase Participating in the planning process • Represent business units? • Represent control groups? Participating in the Buy- In Process ©ReGroup, LLC 2010 13
- 14. The Five Stepsof Strategic Planning Step 1: Identifying Issues/Risks Annual Review results Past, Present and Future Business • Growth in assets and complexity • New product development • Expertise and capacity • (Pre-Step 1: gather information on the direction of your firm) SEC best practices ©ReGroup, LLC 2010 14
- 15. Identifying Issues The SWOT Analysis • Strengths (internal) • Weaknesses (internal) • Opportunities (external) • Threats (external) Factors that are both STRENGTHS (internal) and OPPORTUNITIES (external) = a potential area for growth Factors that represent WEAKNESSES (internal) and threats (external) = require action ©ReGroup, LLC 2010 15
- 16. SWOT Analysis Strengths Weaknesses Opportunities O t iti Opportunity- Opportunity Opportunity- Opportunity Strength (OS) Weakness (OW) Overcome Internal Use strengths to weaknesses by take advantage of taking advantage opportunities of opportunities Threats Threat-Strength Threat-Weakness (TS) (TW) External Use strengths to Minimize avoid threats weaknesses and avoid threats ©ReGroup, LLC 2010 16
- 17. SWOT Analysis Strengths Weaknesses Internal Opportunities Threats External ©ReGroup, LLC 2010 17
- 18. Step 2: PrioritizeIssues Not every issue deserves the same weight; you must prioritize because you cannot do everything at once. Factors: • Business goals • SEC i tinterests t • Patterns of conduct • Change • Intuition Value judgments ©ReGroup, LLC 2010 18
- 19. Don’t Be Temptedto… Demote issues that that… • You don’t know how to address • You think will be expensive…(cost comes later) • Relate to senior management Give priority to issues that are… • Arguably petty or unsupportable • That already have o e bu t so ut o s at a eady a e overbuilt solutions ©ReGroup, LLC 2010 19
- 20. Step 3: MatchObjectives to the Risks Define Categories: • Compliance Process: P&P Training Escalation E l ti Exceptions • Substantive areas Deliverables Milestones/Calendaring ©ReGroup, LLC 2010 20
- 21. SMART Plan Specific Measurable Accountable Realistic Time-Bounded ©ReGroup, LLC 2010 21
- 22. Step 4: IdentifyNecessary Resources Executive Attention • Corporate Governance: who decides? Legal resources HR resources Technology resources Education and Training Project Management Networking N t ki Internal vs. External ©ReGroup, LLC 2010 22
- 23. Resources Necessary forSuccess Expertise • Professional services • Possible selection of counsel with expertise in investment management People • Add a full time junior operations person with industry experience • Outsource accounting; requires research to identify the appropriate candidate Technology • Resources appear to be adequate; utilizing existing technology Education • Internal time from colleagues to our consulting model and the due diligence process • On-going coaching • May consider a compliance certification (Q4) ©ReGroup, LLC 2010 23
- 24. Step 5: IdentifyCosts of the Initiatives Dollars $$$ Employees – “FTEs” • Compliance Department • Other Departments Time Technology/Systems Outs de Cou se /Co su t g Outside Counsel/Consulting Benchmarking ©ReGroup, LLC 2010 24
- 25. Leveraging Leadership WithinCompliance Compliance Plan Which Is Adopted By Management Goals and Objectives for Each Compliance Sub-unit Individual Success Criteria Which Feed Into Group Goals ©ReGroup, LLC 2010 25
- 26. Setting Standards Expectations for Compliance Professionals Conduct compliance responsibilities in accordance with the highest p p g ethical standards; Demonstrate knowledge of the firm’s technical compliance requirements; Know the role of the compliance department; Demonstrate knowledge of the firm’s business; Conduct compliance responsibilities in a consultative and professional manner; Be pro-active, inquisitive, able to exercise professional skepticism, and able think critically; Contribute to the identification, assessment and mitigation of compliance risk; Assist in the creation of policies and procedures to address the identified risks; Properly and appropriately escalating compliance issues; and Participate P ti i t as appropriate in industry efforts to develop and i l i t i i d t ff t t d l d implement t good compliance practices for advisers ©ReGroup, LLC 2010 26
- 27. Buy-In Process Create a management structure that has oversight • Requirement of a Compliance Steering Committee Mindset: Support vs. Control Present the plan • Requested feedback • Asked them to ratify the plan as the firm’s plan Set expectations by defining success e pectat o s de g If all else fails…call it an ‘experiment’ ©ReGroup, LLC 2010 27
- 28. Sample Outline Compliance Department Mission 4. Supervisory Structure and Statement Accountability Standards of Conduct for Compliance 5. Administration of the Compliance Professionals Program Participants 6. Substantive Issues Compliance Credentials A. Books and Records Background B. Trading and Portfolio • Change Compliance • Progress on Previous Plan C. Code of Ethics Risk Analysis D. New Product/Instrument/Client Key Issues (Prioritized) Type 1.Inspection and Enforcement Required Resources 2.Culture of Compliance p Cost Anal sis Analysis 3.Risk Identification and Mitigation Processes ©ReGroup, LLC 2010 28
- 29. Process Reviewed business model • Client type, investment mandate • Historic and anticipated growth Reviewed documents: how we present ourselves in writing • Model RFP, Form ADV, IA Agreement, written policies and procedures, sales presentation Reviewed current time allocation for Sabrina SWOT Analysis Identified key operational/compliance risk areas Developed alternative mitigation solutions for consideration ©ReGroup, LLC 2010 29
- 30. Strategic Planning inFive Steps • Identify risks based upon conflicts of 1 interest • Prioritize risks 2 • Mitigate Risk 3 Link key initiatives and objectives: a “SMART” Plan SMART • Assign Resources and Budget 4 • Report on progress 5 ©ReGroup, LLC 2010 30
- 31. Communicating the Plan The compliance program may be considered ‘just overhead’ just overhead • Various departments may be asked to contribute to and support the plan with time and money Consider a mini-PR plan for your Strategic Plan •CCompliance D li Department t t • Compliance Committee • Executive Management • Various Department Meetings – 10 min Wash, rinse, repeat…good messages bear repetition ©ReGroup, LLC 2010 31
- 32. Make Your Id Mk Y Ideas Sticky Sti k Compliance ideas are not naturally Six Principles of Stickiness sticky…or interesting… 1. Simple Sticky = effective y 2. Unexpected p The Curse of Too Much Knowledge 3. Concreteness Ever try humor? 4. Credentialed ReGroup Recommended Reading: 5. Emotional • Made to Stick, Chip Heath and Stick 6. Story y Dan Heath SUCCESs ©ReGroup, LLC 2010 32
- 33. Execution: Measurability Why measure • Holding yourselves accountable • Creating expectations Management • Predictability Colleagues Defining your own success • It’ your job – you’re th expert It’s j b ’ the t • Proactively/empowering compliance Playing to your strengths ©ReGroup, LLC 2010 33
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- 35. Overhead vs. Value-Added Assist in protecting the firm’s reputation firm s Design a compliance program to meet regulatory requirements and improve internal efficiencies Strengthen client relationships; improve sales and retention Create transparency by packaging information in a manner designed to enhance decision-making Reduce regulatory and business risks Improve individual employees’ efficient execution of their compliance responsibilities Interact, transact and integrate with vendors ©ReGroup, LLC 2010 35
- 36. Credibility: Become aTrusted Adviser System of compliance must win trust of the boards, employees, y p , p y , vendors, clients and regulators Steps to building trust: Transparent: Open, going beyond current requirements or expectations Responsible: Clearly acting in the broader and longer term interests of all Uncompromising: Committed to highest ethical position Successful: Results-driven Temperate: Structured and executed against risks, avoiding reactionary decisions ©ReGroup, LLC 2010 36
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- 38. Thank You Ann Oglanian President and CEO ReGroup, ReGroup LLC 415.681.2230 aoglanian@regroupllc.com