Get ahead of
Regulators tend to be more willing to work with
you if you are making a serious effort to develop
and refine your Risk Management Program.
The “third leg” of any business or business unit is “risk management” (The other two are sales and service)! Certainly this is true for Registered Investment Advisors. Industry regulators are focusing more and more on this component of firm management. The regulators recognize that many firms do not have well-defined policies and procedures in place to identify and properly manage risk. Regulators’ feedback has ranged from “better have a plan when we come in the next time” to serious criticisms of existing policies and procedures or about the lack thereof. RIA firms typically have limited resources and have always had to balance how they respond to regulatory requirements with the other expectations that exist.
A bank purchased an RIA in their local market from a person that they knew socially and civically.
The parameters for policies or procedures provided by the regulators are often vague and/or unclear. Furthermore, the general guidance provided is often conceived with larger departments in mind. Regulators tend to be more willing to work with you if you are making a serious effort to develop and refine (on an on-going basis) your Risk Management Program. The significance of and the emphasis on Risk is not going away…Most industry observers agree that it will continue to increase.
Pohl Consulting and Training, Inc. assists RIA firms in all aspects of their business, including evaluating the risk inherent in their business and then helping define the processes that need to be implemented or improved in their particular organization.
Our initial step is to assess the risk inherent in the business and specifically in your organization. There are several components of risk management that are addressed:
- Policy and Procedures
- Acceptance policy and practice
- Account review process
- Account closing process
- Operational Risk and Risk Management Protocols
- Staff and Management Consciousness and Understanding of Risk
- Client Relationship Management
- Client contact (Quantity and Quality)
- Client contact documentation
The output of such a project is a written report with two major components.
- A general assessment of your risk and
- A series of recommendations to enhance your risk management processes and systems.
Get ahead of the regulators! Make sure you have acceptable risk management policies and procedures!