In this month’s article, Lexington Compliance recommends an agenda for your firm’s annual compliance meeting.
As part of a firm’s annual compliance tasks, every registered investment advisor (RIA) firm should host an annual compliance meeting for all supervised persons of the firm. This is an opportunity to obtain annual attestation statements, deliver all documents relevant to the attestation statements, discuss any relevant regulatory changes, reinforce the firm’s “culture of compliance,*” and provide an overview of the compliance responsibilities that impact each individual staff member of the firm. In general, an RIA firm’s policies and procedures manual should outline the process for the firm’s Chief Compliance Officer (CCO) to conduct a series of review activities, including an annual compliance program review,* as mandated by Rule 206(4)-7 of the Investment Advisers Act of 1940.*
In addition, the CCO is generally tasked with training company staff on a variety of relevant regulatory topics that impact the firm and each individual at the firm. The annual compliance meeting can serve as the platform to address many of the compliance training responsibilities. While setting the agenda for the annual compliance meeting may feel a bit daunting at first, below are some tips for the firm's CCO to consider regardless of whether a firm is federally registered with the Securities and Exchange Commission (SEC) or with the relevant state or states.
First, the CCO should review the firm’s policies and procedures manual to ensure all training requirements are met. Next, the CCO should review the firm’s most recently completed risk assessment document. The assessment’s documented results can go a long way in identifying the risks that might befall a firm and what policies and procedures should be put into place to help detect and mitigate their occurrence. In general, the firm’s CCO should consider focusing on the firm’s highest compliance risk areas revealed by the annual risk assessment.
In addition, here is a sampling of some current RIA regulatory hot topics and associated training focus areas, as well as other relevant topics:
Is your firm's staff familiar with your firm's information security policy?
Does your firm's staff know how to identify a potential hacking or phishing event?
Is your firm's staff familiar with your firm's business continuity plan?
Is your firm's staff properly prepared to handle a business disruption?
Is your firm's staff familiar with your firm's social media policy?
If social media usage is allowed, is your firm's staff aware of the review policy?
- Client transfer of money requests
Is your firm's staff aware of your firm's policy for properly confirming all money transfer or wire requests?
Does your firm's staff know who at the firm to contact in the event of a suspicious request?
There is no requirement for the firm to conduct an annual compliance meeting at the end of a calendar year. Instead, as RIA compliance consultants we generally recommend that a firm considers hosting its annual compliance meeting after the firm’s annual Form ADV amendment period and distribution to clients. This generally leads to conducting the meeting in the spring. However, there is no "right" time to conduct the annual meeting and firms should do what best accommodates their specific situations. In addition, firms should keep a copy of the meeting agenda and any associated handouts on file. This documentation will help to further reinforce the firm's culture of compliance and commitment to staff compliance training.
Free Basic Compliance Hotline provided by Lexington Compliance* for Scottrade® RIAs
To learn how Lexington Compliance can help you understand compliance issues, please visit riainabox.com.* Talk to your advisor service team at 877.726.8741 or firstname.lastname@example.org about the free basic compliance hotline** provided to Scottrade® advisors by Lexington Compliance.