Compliance responsibilities grow with every passing year. New regulatory mandates, examination priorities, trends in regulatory enforcements, changes in business, personnel changes, adding new business lines. These are only a few of the many considerations of which compliance professionals must be aware in order to run an effective compliance program amidst the ever-evolving landscape.

It is a hard job, and every year, it gets more difficult. In addition to that, many professionals often take on added roles at understaffed firms, making the strain on implementation of the vision that much more difficult. Certain advances and alternatives in the industry have supplied hope for compliance professionals. Below are a few key tools we have seen our clients use to help reduce the overwhelm.


Some firms are reluctant to move to the “dark side” of using technology in their business and compliance processes. However, for small firms with a limited workforce, assessing what tools can be used to leverage existing resources can help alleviate and streamline failing processes. Many of our clients use our proprietary software, MasterSupervision, for task management and supervisory oversight to aid them in creating accountability and transparency. Other firms have used project management software, workflow software, and other tools that enhance their current process.

First, assess and prioritize your greatest challenges and how technology can help overcome the challenges. This will help establish a starting point and a target. It is easy to become quickly overwhelmed with the options if you do not understand how to carefully select software to manage or alleviate an issue. Next, ensure that the software meets electronic storage rule requirements under SEA 17a-3 and SEA 17a-4. This includes requirements for third party downloader and method of storage of the data.

Outsourcing Vendors

Outsourcing occurs when a firm engages with a third party to complete certain work or projects. An outsourcing relationship should be a collaborative approach. Outsourcing is a great tool to help quickly add specialized support to your current compliance program. Compliance consultants may supply the knowledge and direction needed to help educate and empower the current compliance staff.

Managed Service Providers (MSPs) can help aid with the IT and technological aspects of the firm without bringing them in-house. Outsourcing can also aid your firm in several areas including managed programs, education, tools and resources, software, and even implementation. Many firms outsource several functions to third parties. When making this consideration, make sure to perform proper due diligence and vet out any outsourcing relationship. Doing so will help confirm that they have the knowledge, experience, and ability to supply the service and meet any regulatory requirements.

Exception Reports

Exception reports are an underrated but overly valuable tool in a compliance professionals’ arsenal. Firms or their custodians create exception reports are reports to look for patterns and red flags. It may cover areas such as trading, money movement, employee activities, trade reporting, anti-money laundering, and high-risk accounts and activities.

In a world where the regulators use tools to help identify the greatest risks to the firm, firms are immediately at a disadvantage if they are not implementing these same tools. Firms should choose, design, and calibrate their exception reports to fit their business. Off-the-shelf reports provided by the clearing firm are not recommended without reviewing the codes, thresholds, and triggers. Often, these must be adjusted so that the report is specialized to the firm characteristics and is more efficient in identifying risks. When set up correctly, exception reports save time in highlighting trends and patterns compared to reviewing a 5-page daily trade log with all data lumped together.

Our expert consultants have worked with clients to help them design and develop a more streamlined and effective compliance program. Our approach includes implementing our proprietary software for task management, as well as providing relief through managed programs. Contact us for more information.