1. Chicago Compliance Group
February 8, 2010
Strategic Planning for Compliance
Ann Oglanian
CEO and President
ReGroup, LLC

2. The Problem
How do we get it all done?
g
How do I get some help?
The Solution
Translated strategic planning
Connect to the business
Speak their language
ReSet Expectations
©ReGroup, LLC 2010
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3. Presentation Overview
Part One
• Why do strategic planning?
• The 5 Step Process for Planning
Part Two
• Strategic Planning
Part Three:
• Getting Buy-in
• Meas ring progress
Measuring
Part Four:
• Discussion – identifying and communicating the value
of compliance
©ReGroup, LLC 2010
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4. There is nothing so useless as
g
doing efficiently that which
should not be done at all.
all
~Peter F. Drucker
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5. YOU
Success is Linked
Compliance
Program
Your Firm
The Industry
Regulation
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6. Your Skill Set
Actual vs Perceived
vs.
Technical skills get you in the game; conducting
yourself professionally leverages your chances of
winning
#1 Problem area: Communication skills
How can strategic planning increase your
credibility
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7. The Mindset
Why and how to define your job
What does success look like?
•
•
•
•
What d
Wh t does it mean to become an effective
t b ff ti
compliance professional?
How do you measure success?
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8. Time Analysis: Current (%)
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9. Matching Allocation to Priorities
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10. Why Do Strategic Planning?
Powerful tool to help define your own success
Effective execution and measurable results
Focus on the right issues
Create consensus
Credibility:
• Holding yourself to a high standard of accountability
• Effective commutating in “CEO”
Create
C t a competitive advantage for your firm
titi d t f fi
Make a strong (and successful) argument for resources
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11. Why Create a Written Document?
Credibility
Measurability
Clarity – basic management and discipline
Evidence – to meet the “show me” standard
show me
To share with others
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12. Who are Your Constituencies?
Internal Clients
• Supervisory functions/Business Units
Control groups
Management
Compliance Steering Committee
Compliance staff
Regulators
Shareholders
Sh h ld
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13. Using Your Constituencies for Planning
Information Gathering Phase
Participating in the planning process
• Represent business units?
• Represent control groups?
Participating in the Buy- In Process
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14. The Five Steps of Strategic Planning
Step 1: Identifying Issues/Risks
Annual Review results
Past, Present and Future Business
• Growth in assets and complexity
• New product development
• Expertise and capacity
• (Pre-Step 1: gather information on the direction of your
firm)
SEC best practices
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15. Identifying Issues
The SWOT Analysis
• Strengths (internal)
• Weaknesses (internal)
• Opportunities (external)
• Threats (external)
Factors that are both STRENGTHS (internal) and
OPPORTUNITIES (external) = a potential area for growth
Factors that represent WEAKNESSES (internal) and threats
(external) = require action
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16. SWOT Analysis
Strengths Weaknesses
Opportunities
O t iti Opportunity-
Opportunity Opportunity-
Opportunity
Strength (OS) Weakness (OW)
Overcome
Internal Use strengths to weaknesses by
take advantage of taking advantage
opportunities of opportunities
Threats Threat-Strength Threat-Weakness
(TS) (TW)
External Use strengths to Minimize
avoid threats weaknesses and
avoid threats
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17. SWOT Analysis
Strengths Weaknesses
Internal
Opportunities Threats
External
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18. Step 2: Prioritize Issues
Not every issue deserves the same weight; you must prioritize
because you cannot do everything at once.
Factors:
• Business goals
• SEC i tinterests
t
• Patterns of conduct
• Change
• Intuition
Value judgments
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19. Don’t Be Tempted to…
Demote issues that
that…
• You don’t know how to address
• You think will be expensive…(cost comes later)
• Relate to senior management
Give priority to issues that are…
• Arguably petty or unsupportable
• That already have o e bu t so ut o s
at a eady a e overbuilt solutions
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20. Step 3: Match Objectives to the Risks
Define Categories:
• Compliance Process:
P&P
Training
Escalation
E l ti
Exceptions
• Substantive areas
Deliverables
Milestones/Calendaring
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21. SMART Plan
Specific
Measurable
Accountable
Realistic
Time-Bounded
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22. Step 4: Identify Necessary Resources
Executive Attention
• Corporate Governance: who decides?
Legal resources
HR resources
Technology resources
Education and Training
Project Management
Networking
N t ki
Internal vs. External
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23. Resources Necessary for Success
Expertise
• Professional services
• Possible selection of counsel with expertise in investment
management
People
• Add a full time junior operations person with industry
experience
• Outsource accounting; requires research to identify the
appropriate candidate
Technology
• Resources appear to be adequate; utilizing existing
technology
Education
• Internal time from colleagues to our consulting model and the
due diligence process
• On-going coaching
• May consider a compliance certification (Q4)
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24. Step 5: Identify Costs of the Initiatives
Dollars $$$
Employees – “FTEs”
• Compliance Department
• Other Departments
Time
Technology/Systems
Outs de Cou se /Co su t g
Outside Counsel/Consulting
Benchmarking
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25. Leveraging Leadership Within Compliance
Compliance Plan Which Is Adopted By Management
Goals and Objectives for Each Compliance Sub-unit
Individual Success Criteria Which Feed Into Group Goals
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26. Setting Standards
Expectations for Compliance Professionals
Conduct compliance responsibilities in accordance with the highest
p p g
ethical standards;
Demonstrate knowledge of the firm’s technical compliance requirements;
Know the role of the compliance department;
Demonstrate knowledge of the firm’s business;
Conduct compliance responsibilities in a consultative and professional
manner;
Be pro-active, inquisitive, able to exercise professional skepticism, and
able think critically;
Contribute to the identification, assessment and mitigation of compliance
risk;
Assist in the creation of policies and procedures to address the identified
risks;
Properly and appropriately escalating compliance issues; and
Participate
P ti i t as appropriate in industry efforts to develop and i l
i t i i d t ff t t d l d implement t
good compliance practices for advisers
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27. Buy-In Process
Create a management structure that has oversight
• Requirement of a Compliance Steering Committee
Mindset: Support vs. Control
Present the plan
• Requested feedback
• Asked them to ratify the plan as the firm’s plan
Set expectations by defining success
e pectat o s de g
If all else fails…call it an ‘experiment’
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28. Sample Outline
Compliance Department Mission 4. Supervisory Structure and
Statement Accountability
Standards of Conduct for Compliance 5. Administration of the Compliance
Professionals Program
Participants
6. Substantive Issues
Compliance Credentials
A. Books and Records
Background
B. Trading and Portfolio
• Change
Compliance
• Progress on Previous Plan
C. Code of Ethics
Risk Analysis
D. New Product/Instrument/Client
Key Issues (Prioritized) Type
1.Inspection and Enforcement
Required Resources
2.Culture of Compliance
p
Cost Anal sis
Analysis
3.Risk Identification and Mitigation
Processes
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29. Process
Reviewed business model
• Client type, investment mandate
• Historic and anticipated growth
Reviewed documents: how we present ourselves in writing
• Model RFP, Form ADV, IA Agreement, written policies and
procedures, sales presentation
Reviewed current time allocation for Sabrina
SWOT Analysis
Identified key operational/compliance risk areas
Developed alternative mitigation solutions for consideration
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30. Strategic Planning in Five Steps
• Identify risks based upon conflicts of
1 interest
• Prioritize risks
2
• Mitigate Risk
3 Link key initiatives and objectives: a “SMART” Plan
SMART
• Assign Resources and Budget
4
• Report on progress
5
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31. Communicating the Plan
The compliance program may be considered ‘just overhead’
just overhead
• Various departments may be asked to contribute to and
support the plan with time and money
Consider a mini-PR plan for your Strategic Plan
•CCompliance D
li Department
t t
• Compliance Committee
• Executive Management
• Various Department Meetings – 10 min
Wash, rinse, repeat…good messages bear repetition
©ReGroup, LLC 2010
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32. Make Your Id
M k Y Ideas Sticky
Sti k
Compliance ideas are not naturally Six Principles of Stickiness
sticky…or interesting… 1. Simple
Sticky = effective
y 2. Unexpected
p
The Curse of Too Much Knowledge 3. Concreteness
Ever try humor? 4. Credentialed
ReGroup Recommended Reading: 5. Emotional
• Made to Stick, Chip Heath and
Stick 6. Story y
Dan Heath
SUCCESs
©ReGroup, LLC 2010
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33. Execution: Measurability
Why measure
• Holding yourselves accountable
• Creating expectations
Management
• Predictability
Colleagues
Defining your own success
• It’ your job – you’re th expert
It’s j b ’ the t
• Proactively/empowering compliance
Playing to your strengths
©ReGroup, LLC 2010
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34. Overhead vs. Value-Added
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35. Overhead vs. Value-Added
Assist in protecting the firm’s reputation
firm s
Design a compliance program to meet regulatory requirements
and improve internal efficiencies
Strengthen client relationships; improve sales and retention
Create transparency by packaging information in a manner
designed to enhance decision-making
Reduce regulatory and business risks
Improve individual employees’ efficient execution of their
compliance responsibilities
Interact, transact and integrate with vendors
©ReGroup, LLC 2010
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36. Credibility: Become a Trusted Adviser
System of compliance must win trust of the boards, employees,
y p , p y ,
vendors, clients and regulators
Steps to building trust:
Transparent: Open, going beyond current requirements or
expectations
Responsible: Clearly acting in the broader and longer term
interests of all
Uncompromising: Committed to highest ethical position
Successful: Results-driven
Temperate: Structured and executed against risks,
avoiding reactionary decisions
©ReGroup, LLC 2010
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37. ©ReGroup, LLC 2010
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38. Thank You
Ann Oglanian
President and CEO
ReGroup,
ReGroup LLC
415.681.2230
aoglanian@regroupllc.com