Transforming the Act of Compliance

Compliance is mainly seen as a laborious, boring, and painful process that advisors must endure. Given the growing visibility and severe enforcement actions of regulatory agencies in the US financial services industry, it may be time for advisors to shift their thinking to focus less on the personal legal side of compliance and instead consider the client’s perspective. Many advisors may not fully consider or recognize that compliance is about protecting clients, as well as, ensuring and proving professional behavior. With that mindset, it becomes more than just a checkbox of rules.

Realizing the two sides of compliance can become a strategic advantage: one, making sure advisors can show proof of audited trails of client protections and, two, advisors can now demonstrate and promote the professional behaviors that decrease risks and show how they apply the intended benefits of the laws to their clients. Unfortunately, the onerous administrative and intensive amount of time needed, overshadow the proactive benefits of using their proven “client risk management” skills to build competitive branding and positioning for the advisor and their firm. If technology can be applied to make this less onerous and more efficient, we can get to a great win – a win for all!

And along comes, SmartRIA – a software as a service (SAAS) compliance and business management platform for RIAs. We decided to check in with Institute member Mac Bartine, CEO of SmartRIA to discuss his goal of transforming a RIA’s operational drudgery into competitive positioning. It is a great example of strategic thinking - if you must do this activity anyway, you might as well find the positive in the negative and focus on turning it into a competitive advantage!

Hortz: What must change in an advisor’s thinking and perspective to be able to “transform” compliance from a chore into a proactive business tool?

Bartine: We all know that the RIA must expect and require all operational employees and investment advisor representatives (IARs) to complete their regulatory obligations, without exception. The trick is in:

  1. Making that as easy as possible - it is important that IARs understand that the compliance process that they consider to be a burden can be pretty easy with the right tools, and
  2. Explaining to the IARs that a strong culture of compliance allows a firm to proactively communicate a positive message to their clients at multiple touchpoints like newsletters, website, blogs, etc. This process gives advisors a way to communicate proof of their commitment to the safety of clients’ money.

“I don’t care until you show me how much you care” is an old axiom that comes to mind. Explaining your firm’s culture of compliance is a great way to show you care and a great way to build trust and referrals to friends and family.

Hortz: What is SmartRIA doing to help in this transformation?

Bartine: We are obsessed with 3 things that are causing compliance professionals and leadership in large firms to take notice:

  1. We work to solve more compliance problems in a single platform than anyone else so firms can use fewer software solutions to get things done.
  2. We are constantly talking to our customers and reacting to their feedback to make our software easier to use, faster to complete tasks, and simpler to understand.
  3. We are obsessed with providing a great service experience so your team does not throw up their hands and say they cannot do compliance. We call our customer service experience Software as a Partnership™, and many firms have complimented us on our heightened level of customer service experience.

Hortz: What learning techniques have you incorporated in your software to help advisors and their firms simplify and imbed compliance into the DNA of their business?

Bartine: We tackle that from multiple directions. Most people learn business processes like compliance tasks through repetition. We make compliance consistent and easy to get done so that repetition is as powerful a learning tool as possible. SmartRIA also automates as much evaluation of compliance data as possible so you don’t have to learn what to do – you just have to do it. Further, we break the compliance process down into small bite-sized components that have their own specialized tools, and SmartRIA assigns tasks according to roles in the firm.

These automations, roles, and specialized features help our customers to avoid feeling overwhelmed, so they remain more open to learning about their compliance obligations. This “multi-directional” approach to improved compliance management has led several of our fast-growing RIA customers to say IARs regularly tell them our software makes understanding their compliance obligations easier than they have ever experienced before. Hearing that from our customers is music to our ears.

Hortz: What ways have you seen advisors incorporate their experiences and accomplishments on compliance with their clients?

Bartine: Once a firm has established a strong culture of compliance, we have seen “we are passionate about compliance so you can trust us” language become part of their websites, materials, and paperwork with clients. It is a powerful message to say that the firm actively pursues a culture of compliance and clients can expect that their advisor’s fiduciary obligation is being overseen and proven on a day-in-day-out basis. The wording of that will depend on the branding of the firm, but the core message is that the firms do not just pay lip service to the security of clients’ money. “It’s in our agreements. It’s in our branding. It’s in our communications with you. We genuinely care.”

Hortz: From your perspective, what industry trends do you see that are supporting this need for advisors to transform their thinking?

Bartine: Compliance trends change, as do the rules and regulations we have to follow. When firms focus on one thing over another to try to keep up with trends in regulatory exams, they run the risk of forgetting to do all the requirements, not just the ones they have heard are being looked for in exams. Said another way, if you are not staying on top of all your compliance obligations, then compliance will stay on top of you. It goes without saying that the latter of those options is not a fun experience.

Hortz: What best advice can you offer advisors on how to navigate the accelerating rate of change going on in the financial services industry?

Bartine: Get a technology tool like SmartRIA that includes a change management process for building new laws and rules into your workflow. Using Excel or other popular legacy solutions works, but it is very easy to let something slip through the cracks using that method, and much harder to prove your culture of compliance across the firm. Your life will be easier for taking that step of enhancing your compliance technology and you will have more time for growing your business and other areas of your business that you enjoy doing.

Related: How To Save Over 100 Hours of Time as a Financial Advisor in 2021