The Top 3 Things to Look for in a Compliance Consultant

Navigating the world of compliance consulting doesn’t have to be a chore. Learn the top three things to look for in a compliance consultant.

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If you’re responsible for finding a compliance consultant or hiring a compliance professional to work within your organization, you probably already know how critical your decision is to the success of your firm. From marketing to trading and from human resources to IT, compliance touches upon virtually every aspect of your business. This makes your compliance consulting decision just that much more critical.

It’s for these reasons that compliance professionals should be chosen based on criteria that span three key areas: experience, risk profile, and personality. Let’s break down these qualification areas and explore what matters most within each of them.


Compliance Experience


If you were presented with the resume of a compliance professional, you would likely begin your evaluation with a value assignment of their experience. How long has this person been working in regulatory compliance? Who has this person worked for? What titles have they had, and at what levels have they performed examinations or audits? While these are all great questions, what you’re really trying to get at is the type of experience this person has and whether or not it lines up with the type of compliance consulting you’re looking for.

Big accounting firms with heavyweight names only grant so much credibility until you start peeling back the onion to better understand the kind of compliance work this individual has been involved in. Was your former PwC consultant with ten years of experience actually staffed on only five long dated engagements looking at only one facet of a total compliance program during their career with PwC? This is good to know if they’ve been focused on enhancing portfolio management processes but you’re looking for someone to beef up your filings and disclosures. How about that compliance ‘expert’ who has 20 years of experience at Blackstone? Have they only been looking at marketing disclosures for Blackstone for the past two decades when you need someone who can draft an entire compliance manual for you? Getting bogged down by brand names without evaluating the types of compliance experiences your consultant may have means that you may hire someone without any first-hand experience whatsoever in the area of compliance where you need the most assistance. So, try to go deeper than the titles, prior employers, and even degrees or accreditations.


Risk Profile


Within the regulatory compliance industry, there is a common misperception that because the laws are black-and-white, keeping your firm compliant is a yes-or-no function. The truth is that many of the regulations are open to interpretation and there are various ways to execute on the rule requirement. For example, the Investment Advisers Act of 1940 has antifraud provisions that prohibits among other things, “misstatements or misleading omissions of material facts.” That seems straightforward enough, but what is material to you, me, or the SEC? It’s in this interpretation where compliance consultants operate in a “grey area” that carries with it an element of risk.

For some firms with sterling reputations, nothing but the most watertight, disciplined adherence to regulatory laws is acceptable and when interpreting the rules, they will err on the side of caution. These highly conservative businesses not only want to be well on the right side of regulations, but they may also seek to be on the cutting edge of best business practices as well. A firm of this nature would be poorly matched with an overly commercial consultant who has a broader appetite for risk and may not consider all of the best business practices relevant or worth implementing for the firm.

On the other end of the spectrum, you see firms who want a more commercial consultant who can act as a partner guiding them through the regulatory waters but doesn’t stifle their growth and innovation desires. For them, depending on their risk appetite, they may want to steer clear of any actions that might rise to enforcement actions with the SEC, but they may be willing to push the envelope of compliance and are accepting that there will be a deficiency letter with room for improvement at the end of a regulatory exam. These are the firms that when matched with a conservative consultant feel like compliance is a drag on business and the relationship can become antagonistic.

To avoid a poor working relationship with your consultant, be sure to consider whether your risk profile aligns with your compliance professional.


Personality


Lastly, any compliance consultant you’re looking to hire or contact with should be a good cultural fit. Far too often, firms hire or contract with compliance professionals who look great on paper, but when it comes to communication styles, team interactions, and financial industry “bedside manner,” the consultant just doesn’t mesh well with others within the organization. This kind of cultural conformity is especially important for longer-term projects that can span over multiple months.

Perhaps, the compliance specialist you have may even already be a great fit for the firm, but only when it comes to day to day advice. Maybe, that excellent consultant happens to also be painfully shy, making your annual compliance training equally painful for your staff. There’s no reason you have to use the exact same person for every compliance task at your firm. Divide and conquer.

Many financial services firms might feel like they don’t have many options when it comes to locating a compliance professional that suits them. Our highly fragmented industry means that some of the best solo practitioners and small boutique firms can be largely unknown to the wider market. These small shops typically build their practices on referrals and unless you are a business who happens to know another business that used them, you’re limited to the handful of names thrown at you by your peers.

This is why we developed Complect – to aggregate the compliance expertise in the industry for businesses and democratize access to some of the top talent in the field. Stop compromising on what you want and start finding exactly what you need.

4 min readmilan