With the increasing regulatory requirements in the investment advisory industry, more and more investment advisers are seeking help from compliance consultants. Choosing the right compliance consultant is crucial for meeting regulatory obligations and avoiding potential issues. When selecting a compliance consultant, investment advisers should look for consultants with relevant experience, expertise, and a good track record. By reviewing consultants’ backgrounds, qualifications, services, pricing, and client reviews, advisers can find the best fit for their needs.
The importance of compliance for investment advisers
Investment advisers have fiduciary duties to their clients and must put clients’ interests first. They are subject to regulations by the Securities and Exchange Commission (SEC) and state securities regulators to protect investors. Violations can lead to stiff penalties, lawsuits, and even losing registration. Using a knowledgeable compliance consultant helps advisers keep up with rule changes, review policies and procedures, perform mock SEC exams, and more. This protects the adviser and clients.
Key factors to evaluate potential compliance consultants
When researching consultants, advisers should look for: Experience working with SEC-registered investment advisers: The consultant should have extensive experience assisting similar types and sizes of advisers. Expertise across key compliance areas: Core competencies should include ADV registration, disclosure obligations, advertising review, custody procedures, portfolio management processes, and more. Strong references and reviews: Ask for client references and review online sources to verify the consultant’s reputation and track record of success. Clearly explained services and fees: Quality consultants will detail exactly what’s included in fixed or hourly fees for easy budgeting and expectations setting.
Questions to ask compliance consultant candidates
It’s important to interview a shortlist of potential consultants and ask questions like: – How long have you been a compliance consultant? What is your experience with advisers like mine? – What are your core services and what is your approach to compliance? – Who will be my point of contact and interaction frequency? – What qualifications and certifications do you and your team have? – Can you provide 3 client references I can contact? – How do you keep up with changing regulations and expectations? – How are your fees structured and what is included?
Compare pricing models of compliance consultants
Consultants typically price services in one of three ways: – Hourly rates: Usually $200-$500 per hour, billed periodically. Allows paying only for time used. – Monthly/annual retainer: Predictable flat fee regardless of hours. May cap hours used. – Project fees: Fixed price for completing specific projects. Good for occasional needs.
Choosing the right compliance consultant is key for investment advisers to meet regulatory obligations. Evaluating consultants based on experience, expertise, pricing, and reviews helps find the best fit. Asking targeted questions also provides insights into their qualifications.