Deciding whether to outsource your firm's compliance needs comes with many variables to consider; however, the Coronavirus may have made this decision a bit easier. In today's work-from-home culture, there has been a shift to outsourced work functions. An article from Thomson Reuters points out that, since 2019, "about 28% of financial firms outsource some or all of their compliance functionality."
Cost:
Hiring and retaining full-time employees is incredibly expensive, and even more so in today's declining economy. By outsourcing your firm’s compliance function, you can save both time and money by not having to run all of your compliance functions in-house. Compliance firms can handle your compliance needs at a lower cost.
Business Continuity:
Choosing to hire a compliance firm in the age of COVID-19 can also greatly further your business continuity plan. In 2004, the SEC published Rule 206(4)-7 under the Investment act of 1940. In this Rule, the SEC notes that "an adviser's fiduciary obligation to its clients includes the obligation to take steps to protect the clients' interests from being placed at risk as a result of the adviser's inability to provide advisory services after, for example, a natural disaster."
During this pandemic, business continuity has become a huge issue for almost every business in the world; yet many financial services firms have not really reviewed or updated their business continuity plans for a phenomenon such as this pandemic since the SEC issued Rule 206(4)-7 in 2004. By hiring a compliance firm, it will be easier to keep your business continuity plan current and flexible.
Large Range of Skills:
The Thomson Reuters article states that "almost half of firms reporting a lack of in-house compliance skills as a driver for outsourcing." Whether financial firms are choosing to outsource based on the lack of available talent in their area or the high cost associated with hiring a qualified, full-time CCO, there is clearly a need to access qualified compliance officers with a larger range of skills at a lower cost.
Working from home is quickly becoming the new norm, and with that companies must begin to adjust to that norm. Outsourcing your firm’s compliance needs to a compliance firm that has a team of Experts can save your firm money. It can also free you up to focus on what you do best: Serving your clients.
Rachel Schwartz