The Real World of Compliance: Risk, Reward, and the Respect for Ethics

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The Real World of Compliance: Risk, Reward, and the Respect for Ethics

10/27/2021

In order to balance conducting business and keeping clients and organizations safe, it’s important to approach compliance from a real-world perspective.

Jason Albino, Executive Vice President and Chief Compliance Officer
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With the regulatory environment being as complex as ever, a compliance department’s job should be to demystify. Proper risk management is a key component of any smart business owner’s mentality. However, it’s difficult for financial professionals to be abreast of every regulation. An exceptional compliance department specializes in getting to the root of what it’s going to take to satisfy a regulation without grinding business to a halt.  

In order to balance conducting business and keeping clients and organizations safe, it’s important to approach compliance from a real-world perspective. I recently spoke with Advisor Perspectives Founder and CEO Bob Huebscher to share my experience and key considerations for other professionals in the industry: 
 
  • Zero risk equals zero revenue. Good compliance isn’t about taking zero business risk. While it’s human nature to want to eliminate all potential negative scenarios that a representative or client could find their way into, it’s not always good business. A successful compliance department should be able to appropriately weigh risk against reward. Further, it’s important to not always think in black and white terms but rather see the nuance in each individual situation. 
  • Practice a common-sense philosophy. Understand that every situation is different, even if only a little bit. This is why knowledge, expertise, and critical thinking are so imperative in compliance. Knowing your financial representatives, understanding the real-world circumstances of the issues that they're working with, and exercising common sense to solve their problems, all while keeping in line with regulatory guidelines, is key. 
  • Think in a real-world context. In the real world, we have trusted professionals that have years of experience servicing accounts and developing deep relationships with clients and their families. Policy changes should be thought of in this framework. Maintaining great relationships and keeping lines of communication open with our representatives is a top priority, so that we can address risk management and meeting regulatory requirements collaboratively rather than unilaterally. 

In the real world of compliance, truly unethical behavior is an abnormality. Of course, any unethical behavior is unacceptable, but it’s important to view each client’s case as an individual situation rather than to group them as a whole. 

For more insight on reducing the compliance burden, tune into my podcast with Advisor Perspectives.

 
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