Three Compliance Goals You Should Set for Your Financial Planning Firm

4 min read
January 10, 2019

A new year presents the opportunity to reflect, reevaluate, and refocus for the benefit of our personal and professional lives. When it comes to setting resolutions, many financial planners focus on resetting financial planning goals for their clients, such as debt management or restructuring the household budget.

But what about goals for themselves?

From a business perspective, the new year is an ideal time for firms to evaluate their internal business practices and set goals accordingly.

Perhaps your goal for the year is to implement a new portfolio management solution by initiating a relationship with a new Custodian or TAMP. Or maybe it’s to grow your financial planning firm by “X” number of clients or “X” dollars of revenue.

There are so many areas of business where resolutions can be made. Let’s not forget about an often overlooked one—compliance.

Here are three important goals—or resolutions—that advisors can adopt to improve their compliance program this year.

#1. I Will Read My Compliance Documents

As strange as it may sound, there is evidence to suggest that countless financial advisors neglect this basic and most necessary task.

Often, compliance documents are drafted with the assistance of a compliance consultant upon initial registration.Then, the registration gets approved and the advisor is off and running.

Unless an audit or regulatory exam occurs, or another materially change is being implemented, an advisor can easily go an entire year without reviewing their compliance documents.

The ADV must be updated annually, so the tendency is to mentally bookmark this as an annual task and not look at or think about it again.

But what about your advisory contracts, compliance manual, or business continuity plan?Does your firm have a social media policy or a cybersecurity or data security policy?

There is no regulatory requirement to review these items annually, so many advisors don’t.

It may seem like a waste of time to review these additional documents, especially if there are no changes that need to be made. But just like every other neglected, seemingly mundane compliance task, there is extreme value in spending time exploring documents that may assist a compliance novice in moving forward towards the education needed to become a competent CCO.

#2. I Will Use My Compliance Task Management System

All firms would be wise to utilize technology to manage their compliance program.

As with every other function in business, be it accounting, client relationship management, trading, or invoicing, use of technology quite simply makes life easier.

For firms that have not yet begun a relationship with a compliance task management provider, this is the year to do so.

For those that have compliance task management software but are not consistently using it to update tasks and track deadlines, this is the year to start.

It is best practice to set aside a bit of time on the same date and time each month to log into the software and check for past due and upcoming tasks. If there are tasks that you don’t understand, spend your time researching and ask questions of regulators and compliance consultants to gain an understanding of the purpose behind the task.

There is no better way to get a grip on a compliance program than by leveraging task management software.

#3. I Will Communicate With My Clients and Business Partners About Compliance

In many ways, running an effective compliance program boils down the willingness and ability of the CCO to communicate about compliance.

Sure, clients hear about the big SEC takedowns of massive Ponzi schemes, and by way of these stories are acutely aware of compliance issues. But most clients have no idea how important compliance is to their financial advisor specifically because there is traditionally little-to-no mention of compliance by advisors.

In many cases, advisors communicate with clients about compliance with a grumble while having a client sign a form, as if they are banding together with the client in opposition to the evil “institutional compliance powers that be.”

When they do so, they are indirectly communicating to the client that compliance is not important to them.

In joining with third-party vendors, some financial planners may apologize for the inconvenience while having the business partner complete a process that is required by their compliance program.

Again, this portrays a general lack of concern about compliance.

These negatively-toned communication methods have been made popular in instances in which the advisor is not also the compliance officer. Then, the advisor can pawn off compliance inconveniences on the CCO of the firm. But when the advisor is the CCO of the firm, it becomes even more important that communication about compliance be made in a tone that is indicative of priority.

As a compliance obligation, each firm is responsible for executing third-party due diligence on all outside entities with which there is a professional relationship. This responsibility presents the opportunity to work on presenting compliance items with a sense of urgency.

This time of year, we frequently hear all types of promises and resolutions. But within just a few short months, this talk subsides and most resolutions have been abandoned. This year, I urge you to make—and keep—these three simple compliance resolutions. In doing so, you will build a stronger financial planning firm.


About the Author

Scott is a licensed Securities Principal with experience in both RIA and broker-dealer compliance. He began his financial services career in 2006 as a Registered Representative with E*Trade Financial in Alpharetta, GA. He has also worked with J.P. Morgan Private Banking in Chicago, IL and with Wells Fargo Advisors in Chapel Hill, NC.

Scott’s most recent role before joining Team XYPN was as Compliance Officer of Carolinas Investment Consulting, in Charlotte NC. He’s a graduate of The University of North Carolina at Chapel Hill and holds FINRA Series 63, 65, 24, 4 and 53 Licenses.

Scott lives in Charlotte, NC with his wife Meredith, and their two sons Tyson and Jackson and daughter Eva. In his free time, Scott enjoys watching sports, exercising, and operating the charitable organization he created upon his father’s passing.

You can connect with him on LinkedIn.

Subscribe by email