Howell: We recently conducted a survey that asked small and middle-sized investment advisors what their biggest challenges are in managing their compliance program. The four biggest challenges were:
1. Keeping up with new regulations,
2. Managing existing policies and procedures,
3. Keeping up with business growth, and
4. Obtaining enough resources to manage the program.
Keeping up with new regulations is really a subject matter issue. As we talk with small advisors, we find that many CCOs have multiple roles at their firms and compliance is not their area of expertise. As a result, they are nervous about not having enough subject matter expertise in-house. One way to remedy this is to have an outsourced partner that is dedicated to being current on compliance issues and the details in regulatory actions, which can supplement a firm’s institutional knowledge. That’s one role that CCO Tech plays.
Managing existing policies and procedures is a process issue. What we find is that many smaller advisors have manual processes or outdated technology, such as using Microsoft Office, email, and hardcopy documents to manage their compliance program. These processes are burdensome to both the CCO and the employees. Additionally, advisors aren’t leveraging their compliance data to streamline processes. What is needed, and what we aim to change, is the way compliance is managed by creating simple-to-use, easily accessible applications that use the compliance data to automate processes and cross-check testing.
The last two challenges—keeping up with business growth and obtaining enough resources—is a common issue among advisors of all sizes. Compliance budgets are tight and managing growth through new hires is hard. It takes time to find the right person, to properly train and integrate them into your program. Using technology helps improve processes and extend your current resources, helps efficiently train and integrate new hires, and can reduce or mitigate turnover.
Hortz: What are the key features and benefits of CCO Tech’s compliance software?
Howell: Our system is a web-based application comprised of several components that work together. SEC Filing Manager incorporates regulatory changes into your filing process and provides tips and frequently asked questions to give the user the right information at the right time. It interfaces with users in a friendly way while also providing methodical completion of the form. We built a more conversational approach to complete these forms, which are often structured in complex ways that become more burdensome as the SEC adds additional regulatory requirements onto the form. Our system is designed so that even a user without a compliance background could complete the form accurately. It’s also very affordable so even the small shops can use it without substantial costs or onboard time. Further, we help tag the data in these applications to automate parts of the compliance program.