How to get sales and compliance on the same page

Mark Quinn, of Cetera, and Mitch Avnet, of Compliance Risk Concepts.

There needs to be a healthy working relationship between the powers screaming 'Now!' and those saying, 'Not so fast!'

With all the division and fractious behavior in the world, can’t the legal, compliance and sales teams simply get along?

The legal and compliance teams of any financial advisory practice, either in-house or outsourced, are essentially tasked with protecting the financial advisory practices they are paid to serve. It’s their sworn duty to pump the brakes if a deal has the potential to backfire and cause harm to the firm, no matter how lucrative.

Unfortunately, that cautious reflex often puts them at odds with sales teams, and at times the advisors themselves, who are more risk takers by nature and are anxious to speed up the process and get those assets in house ASAP. Because with no AUM, the firm will soon be SOL.

As a result, there needs to be a healthy working relationship between the powers screaming “Now!” and those saying, “Not so fast!”

To maintain harmony in the office, the sales process must remain collaborative, says Mark Quinn, director of regulatory affairs at Cetera.

“Everybody has to realize that they need to take risks in order to generate business and generate revenue to grow the business,” said Quinn. “But this is an extremely, highly regulated industry. You can’t be cavalier about the potential for regulation and damage to your business.”

Mitch Avnet, managing partner of Compliance Risk Concepts, which provides senior-level compliance advisory services for financial organizations, views his role as balancing the regulatory requirements impacting an organization while always seeking to achieve good commercial outcomes, “where possible.”

“If compliance is built appropriately into the ‘business process’ as an integral piece of the puzzle and builds the trust and respect of the business then we will be included in conversations as a forethought and not as an afterthought,” said Avnet. “Long gone are the days when asking for forgiveness after acting inappropriately is an acceptable course of action.”

Avnet also stresses that legal and compliance teams need to make sure that advisors are up to date on the latest legal and regulatory changes. The more they know on the front end, the less they will be held up on the back end of a deal.

“Regulatory change management is mission critical within our business. It is always a moving target – and ultimately akin to painting a bridge. Once you get done with one side, you immediately have to paint the other,” said Avnet.

Avnet adds that educating a salesforce on the latest regulations is also a money-saver as well compared to the alternative.

“At the end of the day, training is cheap and is a very powerful tool in a firm’s arsenal,” said Avnet.

Meanwhile, Andrew Butte, senior vice president for compliance at Dynasty Financial Partners, likes to say his team is not the “sales prevention” department but the “sales preservation” department.

To achieve that goal, he ensures the compliance team has various training meetings, discussions, or webinars about new rules and regulations throughout the year. On top of that, there is an annual firmwide compliance meeting.

“Most recently we had a discussion about text messaging and in the past there was a webinar about the new marketing rule,” said Butte.

Michael Leverty, founder and CEO of Leverty Financial Group, agrees that maintaining an open dialogue within an advisory office is crucial given the everchanging regulatory environment and evolving client needs.

“Given the dynamic nature of industry regulations, advisory firms must meticulously integrate these updates into their day-to-day operations and systems,” said Leverty. “It is essential for every aspect of the firm to adopt a compliance-focused approach and perspective. To ensure this integration is seamless and current, the compliance department needs daily opportunities to weave in these updates.”

Finally, Rick Ohlrich, chief compliance officer at RFG Advisory, says a visible compliance presence encourages advisors to openly discuss business ideas, client situations, get practice management help and to resolve minor issues before they become trends.

“There is a saying in carpentry, ‘measure twice, cut once,’ and having compliance actively involved with our advisors on the measuring side seeks to avoid the disruptions, problems and triage costs associated with poorly decided upon cuts,” said Ohlrich.