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Culture of Compliance – Creating a Sustainable Culture of Compliance

How do you rally your company’s internal messaging around compliance and help turn compliance into an opportunity and strategy rather than a dirty word? Sabrina Serafin sits down with Heather Fortner, Chief Compliance Officer and Chief Operating Officer of wealth management firm SignatureFD, to discuss creating a sustainable Culture of Compliance.

Culture of Compliance is available on iTunes, Google Play Music and Spotify. Listen now using the player below or download for later.

Creating a Sustainable Culture of Compliance Transcript

Sabrina: Welcome to Frazier & Deeter’s Culture of Compliance podcast series, where we discuss compliance as a competitive advantage in today’s marketplace. I’m Sabrina Serafin, Partner and National Leader of Frazier and Deeter’s Process, Risk and Governance practice.

Today we’re talking to Heather Fortner, the Chief Compliance Officer and Chief Operating Officer of SignatureFD. SignatureFD is one of the nation’s largest wealth management firms, with over $3.8 Billion under management. Heather, welcome to the podcast.

Heather: Thank you, Sabrina.

Sabrina: Let’s start with a bit of background about compliance in your industry. Talk to us about the emphasis on compliance for a firm like yours.

Heather: Absolutely, thanks for asking. Our firm, as a registered investment advisor, is governed by the Investment Advisors Act of 1940, which actually provides really strong protections for consumers. So, we’re very fortunate in our industry to have already built in for us a really great set of guidelines around best practices, areas that we really need to focus on, areas that we need to think about as it relates to compliance in our industry. The Investment Advisors Act of 1940 also established the Fiduciary Duty for registered investment advisors, and that just means that we are obligated and legally responsible to always put our clients’ best interests first. And so, as a business, that really helps to guide what we do and how we do it.

Sabrina: Heather, clearly, your role as a Chief Compliance Officer in the financial services industry is mission-critical. But let’s broaden our scope a bit. Why is it important for companies, even those that are not in your industry, to create a culture of compliance?

Heather: That’s a great question. I think there are three real things that companies need to think about. I think the first thing is that compliance just creates a basis of trust. When there is good compliance, typically a company will build great trust, and that trust is critical for potential consumers of their business. It is also critical for team members, great team members who want to work in that company.

I like to say that good compliance is good business. Compliance is really just about mitigating risk. And when you can put real thought and intention into mitigating the risk for your clients in your business, it creates a smarter business in general and then competitive advantage. I do believe that having a poor compliance program will eventually show a crack in the organization, whether it is through poor processes, either financially or culturally, meaning that people will become unsettled or inauthentic or incongruent with who they are as people.

Sabrina: If the organization does not have a strong compliance program, now that we’ve covered the why, let’s tackle the really hard question again for anyone in any industry: how do you begin creating that culture of compliance?

Heather: That’s a really great question. And I think that the first thing is that you have to believe it. Leadership has to truly believe that creating a culture of compliance is important, because if they do not believe it and truly mean it, then they can’t be truly committed to it and authentic with it. And eventually, if you’re not authentic with something, people will see through it, and I think you do more damage in trying to create a fake compliance program than you do in just truly believing in one and committing to doing it well.

I think the second thing is that you hire good people and be diligent and be discerning about who you are adding to your team. It is easy for people to do the right thing when it’s an easy situation. It is really hard for people to do the right thing in complex and difficult situations, and if you are not hiring people well and hiring people who at their core live with integrity and morality and values, then when they find themselves in those really difficult situations, they will really struggle to make the right choices. Make it simple. Compliance does not have to be hard. And the simpler you make it and the more you build it into your processes so that it just happens as people are doing their normal daily jobs, the more you remove the necessity for them to make judgment calls along the way.

I also believe that you have to believe the best but plan for the worst. That is your job as any kind of compliance officer. And then I think you teach people the why. Teach them why these things matter. Teach them why you’ve built the processes in the company a certain way, because when people understand the why and they understand the reasons behind doing things a certain way, not only does it create more engagement and more buy in and more alignment in the day to day, but it also helps them make better decisions in the future if they come up against something that they’re not sure of.

And then I think most critically for compliance people and creating a culture of compliance, be a “yes” person, not a “no” person. Please build a program where compliance is a partner to other people’s success. If you can come alongside other people in the organization, other divisions in the organization, and help them on their way to success in a way that actually is within the confines of whatever regulations you’re working within, then it’s a win-win for everybody.

Sabrina: Being in the financial services industry, your job is hard enough. But how have you seen your job evolve with the age of technology and social media, where basically you’re an agent of the company almost 24/7?

Heather: I think everyone faces these issues today. There is very little separation for anyone anymore between personal and professional with lives lived out on social media. Not only is there very little separation, but the pace at which information flows is just incredible. And so making younger people specifically aware of that and to help them learn how to keep those pieces in the forefront of their mind as they’re living their lives, it is critical. But you also have to understand the regulators, the good guys, and the bad guys, the hackers who are out there to do fraudulent things. They’re also smarter and faster than our businesses are capable of evolving, so we really have to think about this from a holistic standpoint of: “Okay, we’ve got to keep in mind the amount of information, the security of information and the pace of information.”

Sabrina: Well thank you, Heather, for being with us today, and particularly for pointing out that the regulators are the good guys; regulators are there to help organizations align their processes and their procedures to best protect themselves and their clients. Are there any closing thoughts that you’d like to share?

Heather: The one thing is, as a compliance professional, I just really want to impart to people is the belief that people really do want to do the right thing. And as compliance professionals, if we can keep that in mind and we can make that easy for them and we can create situations where the business and the team are able to win together, I think that is true success for a compliance professional.

Sabrina: I couldn’t agree with you more. And thank you again for being part of this very important podcast to our listeners.

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