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Our Philosophy

“The optimum compliance program is one that strikes a balance between
regulatory risk and the human and financial resources of an individual business.”

–Jeff Groves, President

 

We provide business solutions to compliance problems
This may come as a shock to some compliance professionals, but the role of compliance is to support the business efforts of investment firms, not vice versa. Compliance should not dictate procedures on how to run the business model, but should conform to the procedures that most efficiently administer the business model. Therefore, solutions to compliance problems must make business sense as well as bring the firm into regulatory and legal compliance.

Compliance programs are about mitigating risk. Investment firms face risk from regulatory bodies in the form of fines and penalties (including reputational penalties) and risk from legal action by clients or employees or other third parties. These risks are significant in that if a worst case scenario unfolds, it can bring down a firm.

 

Finding your sweet spot
What is the reasonable commitment of resources given the potential severity of the risks? Just as advisers evaluate the risk tolerance of their clients, firms need to evaluate the risk tolerance for regulatory/legal risk. The commitment of resources is similar to an inverse diminishing returns curve as presented below:

With level of risk exposure on the y axis and resources allocated to compliance on the x axis, the graph shows the basis for ComplianceWorks’ approach toward developing compliance solutions for our clients.

A firm that allocates too little resources (human and financial) to compliance really does not reduce the regulatory and legal risk exposure to any great degree. However, once a firm allocates sufficient resources to push down the curve into the optimal allocation or “sweet spot,” it greatly reduces risk exposure to acceptable levels. But, if a firm decides to try for perfection or to push past the “sweet spot”, it hits a point where the incremental resource commitment does not proportionately decrease risk exposure – risk exposure reduction hits a diminishing return for additional resources.

 

ComplianceWorks and Your Firm
We are committed to providing compliance assistance to small–to-medium size investment advisers, broker-dealers, hedge funds and private equity firms. Due to the experience of ComplianceWorks’ staff with investment firms, we understand the frustration of having compliance “requirements” dictated to you that are unrealistic for your organization. Our experience is what creates the approach of keeping business considerations like cost and resource allocation in mind as we develop customized solutions to your compliance issues. ComplianceWorks specializes in providing a hands-on, proactive approach in devising a system by which our clients administer an effective compliance program, even with limited resources. Compliance does not have to be mysterious, difficult or expensive.

Talk to us today about a program that’s right for you.