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Blog > 6 Compliance Strategies Your Firm Can Take

6 Compliance Strategies Your Firm Can Take

With the right investments in people, processes and technologies, every firm can establish a regulatory-ready organization.
A binder that says “compliance” next to reading glasses, a pen, and printed charts on paper.

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How is your firm approaching compliance and compliance costs these days? In a recent insight report from Hedgeweek, researchers found that 50% of larger hedge funds are looking to expand internal legal and compliance teams, while 44% of smaller hedge funds plan to increase compliance function outsourcing. Additionally, the report found that 36% of smaller and larger hedge funds, and 41% of mid-sized hedge funds, are specifically looking for legal guidance on compliance costs right now 

It isn’t surprising, though, that all firms, regardless of size, are seeking advice as to how to manage compliance costs. Regulatory demands have been increasing and evolving since 2007–2008, which makes risk management and regulatory compliance a necessity within every firm’s culture. However, regulatory burdens and compliance concerns do not need to be costly or even a hassle.  

With the right investments in people, processes, and technologies, every firm—large or small—can establish a regulatory-ready organization. As you consider those investments, here are six strategies to implement in your firm.  

Firm Compliance Strategy #1: Your Talent

Compliance starts with the right talent. If you can bring the right people onto your team, you can minimize the chances of non-compliance-related legal, regulatory, and reputational risks. While most firms should at least have an internal chief compliance officer, some firms can outsource compliance concerns to a compliance advisory firm. While both options come with specific costs, the cost of non-compliance violations can be much higher.  

Firm Compliance Strategy #2: Your Time

Every firm could use more time, but no matter how busy your company is, you have to make time to ensure your firm is compliant. Yes, regulations change frequently and, yes, keeping up with regulations can be time-consuming. However, if you can make the time to keep up with these changes, you’ll significantly lower your chances of non-compliance.  

That doesn’t necessarily mean that all the compliance work should fall on your shoulders—you can delegate repetitive compliance-related administrative tasks to a team member and leave the real work to your compliance department or outsourced compliance advisory firm—but you should take the initiative as your firm’s leader. 

Firm Compliance Strategy #3: Your Policies and Procedures

You can think about compliance like you think about flying. Before your plane even gets off the ground, your pilot and crew members review a thorough checklist to ensure it is safe to fly. Why is this process necessary even for seasoned crew members and long-term pilots? Because if even one thing goes amiss, flight failure would be horrific.  

Bring a similar level of attention to detail to your firm with policies, procedures, checklists, and SOPs (Standard Operating Procedures) that ensure your firm’s compliance. Embed compliance in the team’s everyday tasks. Don’t leave your compliance to chance. Again, while the right procedures can be time-intensive and even costly, non-compliance ultimately costs you more of your resources.  

Firm Compliance Strategy #4: Your Training

How well is your team trained in compliance procedures? Compliance is only as good as its adoption in a firm. While you or your internal compliance team may be up-to-date on all the latest regulations, if you don’t pass this knowledge on to the rest of the firm, it can go to waste.  

Make it a priority to train the entire firm on compliance through regular meetings on the subject, mock exams, and other educational tools. Instill good habits of compliance to keep the firm in tip-top shape. Make sure your team knows that they must be knowledgeable on compliance so that they can put that knowledge to use when they are on the job.  

If you find your team lacks compliance training and you’re not sure how to begin working with them to improve their understanding, an external compliance advisor may be able to help. Arootah’s compliance advisors can coach your entire team through the compliance procedures. By increasing training across the firm, you can help your team feel compliance-confident at all times. 

Firm Compliance Strategy #5: Your Collaboration

In addition to bringing your team together for training, it’s important to establish a culture of collaboration around compliance within your firm. After all, every member of your firm—not just the compliance department—is responsible for compliance. Ensure that everyone on your team is working together, to guarantee compliance on all fronts.

Don’t wait until the product or service is available to the market to invite your compliance department to the meetings. Include your compliance team or outsourced advisor early and frequently, to prevent your team from going down a precarious path.

If you’re finding it difficult to include compliance in more team meetings, consider bringing in a compliance advisor to leverage that expert perspective.  

Firm Compliance Strategy #6: Your Technology

Want a new way to make compliance easier for everyone? Start by investing in the right technology. Compliance automations can save you hours of costly labor, freeing up your team to work on more pressing matters. The right tech can not only make the compliance process easier but can also ensure data security and help your firm keep up with regulatory changes.

Leverage technology as much as possible to limit the workload on the security, compliance, IT, and data teams. As breaches in cybersecurity mount, regulators are trying to keep up with threats. Your compliance department must be vigilant about those changes to keep your firm secure. Being proactive and investing in the best, most robust technology now, versus waiting for a threat or issue to arise, can give you a competitive edge.   

The Bottom Line

As regulatory demands increase, it’s critical firms implement risk management and regulatory compliance within their culture to remain regulatory-ready. Leaders need to be proactive to ensure their firm adheres to the best compliance practices throughout internal operations, whether that means investing in an internal compliance team or outsourcing compliance concerns to a consulting firm.  

However, staying compliant doesn’t mean you have to spend a huge amount of money. You can effectively manage costs both short-term and long-term with the right decisions. An Arootah compliance advisor can help you make those right decisions. Our experienced team of business consulting experts will help you keep up with new regulations and adapt your firm’s business model as needed. 

Whether you need to develop effective compliance programs from the ground up or you’re looking for a new strategy to manage your compliance costs, our experts can support you in meeting regulatory requirements while also delivering on your returns. Book a 30-minute strategy call now to learn more.  

Disclaimer: This article is for general informational purposes only and is not intended to be and should not be taken as professional medical, psychological, legal, investment, financial, accounting, or tax advice. Arootah does not warrant or guarantee the accuracy, reliability, completeness, or suitability of its content for a particular purpose. Please do not act or refrain from acting based on anything you read in our newsletter, blog or anywhere else on our website.

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