The August 8, 2016 edition of InvestmentNews, Liz Skinner writes about her discussion with Mr. Ryon Beyer, co-founder and chief compliance officer of Hemington Wealth Management about the efficiencies of outsourcing compliance duties. The focus of the interview is on federal securities compliance, but the analysis is just as applicable to insurance compliance.
What Mr. Beyer notes is that trying to do all of the compliance tasks can be incredibly inefficient. “It would be a challenge for a single person to keep track of all the rule changes coming from regulators.” And of course, that is only one small part of what compliance has to do, and do well.
He also notes that it is a worthwhile activity to have a compliance firm do a mock audit to look for areas of weakness or ways to be more ready for an exam. We have found this to be one of the most valuable services we can provide for our clients. This is especially true for those in distribution, such as IMOs, who are so often trying to do so much with few resources and do not have a history of in-house compliance.
In perhaps the most important part of the article, there is a Tip Sheet box at the end of the piece, which has 5 bullets, paraphrased as follows:
- Choose a CCO with the strength and integrity to resist pressure to ignore something that should not be ignored.
- Build compliance around the firm’s offerings – the fewer services offered, the less complex the compliance demands are likely to be. (Note that in the insurance world, this may often mean not only the services offered, but the states/territories in which they are offered.)
- Have a compliance firm do a mock audit.
- New firms in the creation stage should bring compliance into the discussion at least two or three months before the launch to make sure there is time to get regulatory mandates met.
- Get annual compliance training so the firm has a culture in which everyone thinks about whether they are doing the right thing.
Short and sweet – a lot of great advice!