Regulatory Exams – Setting the Tone and Putting Your Best Foot Forward

best foot forward

The SEC’s 2018 National Exam Priorities[i] clearly lays out five principals guiding the Office of Compliance Inspections and Examinations (OCIE).  Three of those five are centered heavily around technology and the data driven approach to examination efforts.   The Commission’s advances in technology and leveraging of big data collection to target firms and make their exams more efficient means that they have likely done quite a bit of “getting to know you” before they even reached out.

The crucial piece missing from all that data, which can make all the difference between a (relatively) painless exam and one that sends your blood pressure skyrocketing, is the human element.

When Examiners make it known that they have selected your Firm for a visit, your first order of business should be to properly introduce yourself, your team, your clients and your services.

You’ll never get a second chance to make a first impression.

Having a “Day One Exam Powerpoint Presentation” at the ready will set the tone for the inspection. It says to the Examiners that you are professional and prepared. The introduction may very well answer any number of open questions the exam team has, proactively saving everyone time and energy!

Organization charts have long been commonplace among the documents requested by a regulator; however a new request from examiners has arrived on the scene.  Many regulators are now requesting that Registrants produce a, slide deck presentation summarizing, among other things, the Registrant, its clients, its related entities, and the services that each entity provides to Registrant’s clients.

What to include in your presentation:

  • A brief history of your Firm
  • An introduction of key staff and a brief bio of their background and qualifications
  • A summary of services and compensation arrangements
  • An overview of client demographics
  • Affiliated entities
  • Notable outside business activities
  • A list of your key service providers (i.e. the Custodial, Accounting, Portfolio Management, CRM and/or Compliance Consulting with which firms you have partnered)

Remember, while you may be able to recycle a lot of the material that you use to introduce your firm to prospective clients, this is not a sales pitch.  You should take care not to include too much hype or puffery.  This is a regulatory exam, not an online dating profile.

You don’t have to wait for the SEC to ask. Putting together the presentation or slide deck is something that can be done at any time. Why not use the summer months, while your clients are at the beach, to pull together a polished presentation that puts your best foot forward?

 

[i] https://www.sec.gov/about/offices/ocie/national-examination-program-priorities-2018.pdf

 

 

Katherine Libby

 

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