Implementing a Compliance Management System
A new dual-hatted Chief Compliance Officer of an $800M Turnkey Asset Management Program (TAMP) had a vision for modernizing the administration of the firm's compliance program.
The firm's former CCO had not established repeatable processes for the administration of the firm's compliance program. As a result, the firm suffered from the loss of institutional knowledge when she left abruptly. The new CCO insisted on systems that would document processes, and future-proof the firm from additional turnover risk.
The CCO also wanted to streamline basic process, and sought ReGroup's guidance on leading industry practices and a strategy for getting the job done given his limited available time.
First, we interviewed the CCO about his program priorities and reviewed key compliance program documentation. Based on the areas that were the most inefficient and that he believed had the highest regulatory risk, we recommended that the following areas should be systematized:
- Personal trading, political contributions, outside business activities, and gifts and entertainment (clearance and reporting processes);
- Marketing and advertising review process;
- Compliance issue log; and
- A compliance calendar
In order to house repetitive processes, document the administration of the compliance program, and use the CCO's time more effectively, we recommended that the firm implement a COMPLIANCE MANAGEMENT SYSTEM.
Because the CCO served in multiple roles at the firm, he had very limited time to actually do compliance work, and not enough time to redraft workflow. They system would be designed to house the workflow and produce excellent reporting.
The CCO believed the firm would benefit from a compliance management system, but he also recognized that a system’s success depended on a careful implementation.
While the CCO was quite tech-savvy, he knew he could better serve the firm by focusing on substantive compliance matters and wanted to manage the 'implementation risk', that is, the risk of buying systems or software that remain unimplemented or improperly implemented due to the lack of time or expertise in systems implementation.
Trusting our "measure twice, cut once" philosophy, and our implementation experience, he outsourced the implementation to ReGroup. We relied upon our familiarity with compliance management systems and strong project management expertise gleaned from prior compliance systems implementations to research and present vendors, and plann, design, and implement the selected system according to the firm’s business and regulatory needs.
- Centralized compliance data, standardized tracking and reporting, and improved workflow procedures enable the firm to respond to risk, regulation, and potential SEC inspection with greater ease.
- The CCO and CEO are better equipped to evaluate compliance program administration and analyze trend reporting and testing.
- Systematized procedures allow for repeatable and testable processes.
- Lower turn-over risk.
- A very happy client.
SYSTEMS ASSESSMENT, SELECTION, AND IMPLEMENTATION
STEP 1. Researched and presented systems that matched our client's current and desired compliance resources and operational efficiency; provided our recommendation for his selection and negotiated pricing with the vendor.
STEP 2. Designed an implementation plan that identified key milestone dates, deliverables, and periodic status reporting to the client.
STEP 3. Mapped the current workflow to the selected system's workflows.
STEP 4. Created system documentation, messaging, and training materials tailored to the client's specific needs, risks, and resources.
STEP 5. Educated key staff members throughout system implementation using interactive, practical exercises designed to support ongoing workflow.