10 Tips for Navigating the U.S. Regulatory Landscape

10 Tips for Navigating the U.S. Regulatory Landscape
02/01/2022

For asset managers, navigating the U.S. regulatory landscape is not for the faint of heart. However, developing a thoughtful, methodical approach should pave the pathway to success. To the extent that your resources are focused on building and expanding your business, invest a few minutes to learn how to establish an effective and efficient compliance program so you can sleep at night!

1. Hire the Right Compliance-Minded People

Compliance is not a function. It’s a way of life. As you seek to attract and retain the best of the best, ensure they’re motivated to do the right thing—whether or not anyone is looking.

2. Dot Your “I”s and Cross Your “T”s

As you get your investment advisory firm started, you’ll need to register with the Securities and Exchange Commission (SEC). As your firm grows, you’ll update your registration at least annually, noting significant changes. Engage a trusted professional to help you get this important step right.

3. Tailor Your Written Procedures to Fit Snugly with Your Business

The SEC looks for firms who have a compliance manual reflecting an off-the-shelf description of their operating model. Take the time to customize your procedures to encompass what you do and clarify what you don't. More importantly, follow your procedures. Having no procedures is bad, but there’s nothing scarier than a firm who memorializes a set of procedures and fails to adhere to them.

4. Walk the Talk

Compliance is good business. Asset managers set themselves apart with good performance, coupled with high ethics and integrity. Embracing a culture of compliance is the perfect tone at the top.

5. Back Your Chief Compliance Officer

At small firms, the CCO is often the person who lost the coin toss at the team meeting. CCOs typically wear many hats, including CFO and COO. Understand the unique challenges faced by CCOs at financial services firms, and make sure you’re listening to and supporting your CCO. If you have the luxury of hiring additional staff, make sure they have the necessary resources to thrive. Until then, ensure you consider external support to expand your safety net. Better safe than sorry.

6. Document Everything

Assume that if something isn’t written down, then there’s no proof that it’s been done—or that it was the right thing to do. An SEC exam is always just around the corner. Protect yourself from additional hassle. Capture your compliance activities in real time. Compliance technology can help you out here (see Tip #9).

7. Test Periodically

The SEC doesn’t expect any firm to be perfect, but it does expect each firm to have reasonable procedures in place to prevent, detect, and correct issues. One of the best ways to accomplish this is to test regularly and then apply lessons learned.

8. Perform Mock Audits

Testing gets at day-to-day operations, but engaging an outside, objective third party to assist in a mock SEC exam lets you do a dress rehearsal before the regulators show up.

9. Leverage Technology

Embrace technology to simplify your life. Your CEO needs you to be the firm expert and provide guidance in navigating the complex regulatory landscape. Using technology helps remove manual processes, replace legacy practices, and enhance recordkeeping. Plus, it fits seamlessly in the remote work environment. Get on board before it’s too late.

10. Rinse and Repeat

Compliance is a series of daily, weekly, monthly, quarterly, and annual tasks. Just when you cross one thing off your list, you’re staring down four more tasks. It’s up to you to build a compliance program that goes beyond simply focusing on what not to do. Your compliance program can be the way forward for business leaders looking for innovative ways to succeed.

10 Tips for Navigating the U.S. Regulatory Landscape

If any of these tips appear to be unwieldy as you launch your business, consider Joot to get it done—and done right. We bring to the table expert, practical advice coupled with user-friendly technology to keep things running smoothly. Get in touch today.