RIA Compliance and Practice Management Blog

How RIA Compliance Software Helps to Manage and Document Compliance

Posted by RIA in a Box

Apr 20, 2017 10:36:02 AM

key features of RIA compliance software including compliance calendar

The Chief Compliance Officer (“CCO”) of a registered investment adviser (“RIA”) firm understands the challenge that comes with keeping up to date on the latest regulatory changes while also ensuring that all daily, weekly, monthly, and annual compliance tasks are completed. However, just completing the required tasks is often insufficient. All completed tasks need to be properly documented to be able to demonstrate the proper implementation of a compliance program during a regulatory audit.

Historically, many RIA firms have chosen to leverage manual processes for creating a compliance calendar of activities, for documenting internal compliance and best execution reviews, and for managing the collection of employee attestations or outside business activity requests, to name a few. While some firms have leveraged traditional technology such as a Microsoft Excel spreadsheet, many firms still utilize pen and paper for a significant portion of compliance documentation. For firms large and small, manual processes mean more paperwork, more risk for mistakes, and less centralization. While Excel may offer relative benefits compared to pen and paper, it’s not specifically designed to be RIA compliance software and thus requires a tremendous time investment to customize from scratch.

Compliance Software: An Essential Component of every RIA Firm's Technology System

Fortunately, RIA compliance software is rapidly evolving to help CCOs become more efficient through automation while also helping to ensure that no new regulatory rule changes slip through the cracks. When properly utilized, a robust compliance software platform can assist firms of all sizes with:

  • Automated development and management of a tailored compliance calendar of activities
  • Just-in-time education on pertinent compliance topics along with corresponding checklists
  • Centralized storage and archiving of critical firm compliance documents
  • Proper supervision of firm employees with digital attestation collection
  • Notification when registration or notice filing is required in new jurisdictions
  • Onboarding and registering new individual investment adviser representatives
  • Requesting and tracking Form ADV changes
  • Completing the firm’s annual Form ADV renewal amendment
  • Recording all the firm’s compliance activities in one centralized, digital compliance log

RIA compliance software for state and SEC registered investment advisers

Let’s explore each of these features further and the value gained by utilizing compliance software:

Compliance Calendar

The compliance calendar should be tailored to your firm and include established frequencies for review (weekly, monthly, quarterly, or annually) and deadlines by which the activities need to be completed. Any relevant notes regarding the completion of the calendar activity should be saved to your compliance log.

Benefit of Automation Using Software: No manual creation of a calendar of activities that may or may not be relevant to your firm. With software designed exclusively for RIA compliance management, the calendar is created for you and customized to the unique needs of your firm. Sync activities from your compliance calendar to your firm’s customer relationship management (“CRM”) system and receive email notifications when activities are coming due.

Educational Resources

Quick and easy access to industry articles, compliance webinars, and video guides to assist with staying on top of constantly changing RIA compliance and regulatory matters.

Benefit of Automation Using Software: Less time is spent researching regulatory topics online or paying a third party compliance consultant by the hour to research on your firm’s behalf. You can access timely and relevant articles regarding RIA regulatory changes in one central hub and quickly ascertain whether the changes do or do not impact your specific firm.

Document Storage

Digitally maintain current internal compliance documents and archive previous versions in one central platform for quick retrieval and editing. These documents may include the firm’s policies and procedures manual, code of ethics, privacy policy, information security policy, etc.

Benefit of Automation Using Software: The switch to a digital record keeping system for internal compliance documents allows for much easier and thorough record keeping in the event of an audit. As documents are updated, simply upload the new version of the document and the old version is archived for future access.

Supervision Capabilities

Digitally manage the cumbersome attestation collection process by uploading attestation documents to the software platform for employee review and sign-off. Completed attestations are recorded and time stamped in the online compliance log of activities.

Benefit of Automation Using Software: This allows for the elimination of manual processes associated with sending documents and receiving employee sign-off via email or hard copy. Firm attestation documents will be uploaded to the platform and employees will be sent an email reminder to complete their review or sign-off. The CCO can always view the employee supervision dashboard to see the attestation status for each staff member.

Registration Tracker

Receive notification when your firm is approaching the client de minimis in a given state and begin the process of state registration or notice filing.

Benefit of Automation Using Software: This ensures that registrations or notice filings are completed in a timely manner. By integrating with the firm’s portfolio management and reporting system, the compliance software can also programmatically calculate when the number of client households in a given state is approaching the required registration threshold.

New Employee Onboarding

Add new individual representatives to the firm in a streamlined and efficient manner by entering necessary data into the software to populate the U4 and Form ADV 2B filing documents. The software also requires the new representative joining the firm to complete an online questionnaire to be reviewed by the firm’s CCO as part of the review of the process.

Benefit of Automation Using Software: By conducting an online onboarding experience, the software can dramatically reduce or eliminate the need to complete physical paperwork. This leads to a faster and more transparent new representative onboarding process.

Form ADV Amendments

As changes to the firm’s Form ADV become necessary, enter the changes into the software platform for review and completion. By serving as administrator on your firm’s FINRA IARD account, your dedicated consulting team works in tandem with the software to complete the filing on your firm’s behalf once changes are requested.

Benefit of Automation Using Software: Expedite the process of updating your firm’s Form ADV filing by no longer needing to navigate the FINRA IARD system. You’ll also have a full audit trail of all historical changes that have been made to your firm’s Form ADV filing.

Form ADV Annual Renewal

At your firm’s fiscal year end, access a step-by-step process flow of activities to complete, including the payment of renewal fees, and the confirmation of representative and firm registrations. After reviewing the firm’s current form ADV, submit any necessary changes for completion and final amendment filing.

Benefit of Automation Using Software: The entire renewal process is managed through the platform which allows for a more streamlined and transparent process. The software can also alert your firm to any new Form ADV regulatory changes that require updated or new information such as the new changes taking effect in October 2017.

RIA compliance software with online compliance log

Digital Compliance Log

Maintain one central log of activities completed within the software platform along with corresponding time stamps. An archive of the following is found within the online log:

  • Completed employee attestations
  • Completed activity requests (personal trading, marketing and advertising review, outside business activities, etc.)
  • Completed compliance calendar activities
  • Completed compliance checklists
  • Summary of firm and individual registration changes
  • Results of completed annual risk assessments

Benefit of Automation Using Software: Eliminate the need to maintain a separate compliance log of completed activities. As activities are completed in the software, they will automatically be saved to the compliance log and time-stamped with a completion date. This log can be easily filtered, printed, or exported into Excel for auditor review, if necessary.

As RIA compliance consultants, we see firms of all sizes, with varying degrees of automation built into their compliance program. Today, most firms are still not taking full advantage of the advancements in RIA compliance technology that have been achieved in recent years. Our proprietary MyRIACompliance RIA compliance software platform can offer considerable efficiency gains while also ensuring that the firm stays up to date on constantly changing regulations. From the solo advisor filling every role at the firm to the large SEC-registered firm with multiple offices spanning across the country, MyRIACompliance’s modular features can be tailored to address the unique needs of each investment advisory firm.

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Lexington Compliance and RIA in a Box LLC are not law firms, investment advisory firms, or CPA firms. Lexington Compliance and RIA in a Box LLC do not provide legal advice or opinions to any party or client. You should always consult your relevant regulatory authorities or legal counsel if applicable.
 

Topics: RIA Operations, RIA Compliance, RIA Technology

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