Orion Advisor Solutions

Best Practices for Selecting the Right Compliance Technology Solution

The article outlines best practices for selecting compliance technology solutions by emphasizing the need to overcome inertia in updating outdated systems, driven by factors such as the shift to remote work, evolving regulatory requirements, and audit-readiness concerns, and recommends assessing compliance program needs, evaluating existing technology for inefficiencies, and leveraging budget cycles to justify upgrades that better support compliance controls and risk mitigation.

Key Drivers for Evaluating & Requesting New Technology Solutions

When it comes to changing technology platforms, inertia often prevails. Implementing new technology and learning new systems can be daunting, making it tempting to stick with familiar software—even if it has become outdated. However, maintaining outdated systems or processes can be risky, especially in the current compliance environment. This can hinder your compliance program due to factors like post-Covid operational upheaval.

Key drivers for a technology solutions upgrade include:

  • The rapid institutionalization of work-from-home environments, requiring ongoing evaluation of compliance controls, policies, and procedures to mitigate risk and protect client data.
  • The evolving workplace provides an opportunity to reassess compliance processes, procedures, and supporting technology.
  • Annual budget season is an ideal time to examine the firm’s compliance program and technology systems to ensure they continue to meet the firm’s needs and support audit-readiness.

Use the following best practices to assess current compliance needs, evaluate existing compliance technology systems, and prepare a business case for upgrading technology solutions.

1. Assess Compliance Program Needs and Exam Preparedness

Whether managed by a single compliance officer or a team, there are at least five key drivers that can trigger due diligence and influence the decision to upgrade compliance technology:

  1. 1.Concerns about audit-readiness and exam preparedness.
  2. 2.Material changes to business operations.
  3. 3.New rules or regulatory requirements relevant to the firm.
  4. 4.Evaluating the adequacy of current processes, procedures, and program management.
  5. 5.Concerns about the technology solution for “work from home” processes.

2. Evaluating Existing Compliance Technology Systems

After assessing the firm’s program, it’s common to discover redundancies, inefficiencies, and inadequacies in the use of compliance technologies. Sticking with familiar systems across departments doesn’t always justify the cost or the risk of deficiencies during a regulatory exam.

Evaluate the needs and performance of existing compliance technology to build a relevant business ROI case and budget request.

Performance criteria to examine:

  • What functionality needs drove the initial adoption of the system?
  • Were additional systems needed to support other functionality?
  • What aspects of the system have underperformed or not met expectations?
  • Has the technology infrastructure and functionality scaled as needed during the firm’s growth?
  • Are there system functionality or configurability limitations?
  • Is the user experience and access sufficient for employees? Does it promote consistency?
  • Was it efficiently upgraded for “work from home” regulatory policies and procedures?
  • Has system support been a weakness or strength?

3. Build the Business Case and Budget Recommendation

After assessing compliance needs and evaluating the existing technology system, assemble the business case for leadership. The case should demonstrate why it makes financial and business sense to find the right compliance technology solution for current needs and future growth.

Key areas of emphasis:

  • Why the current platform is insufficient for current or future needs, and the drivers supporting the necessity of the request.
  • Internal consensus among practice leaders whose operations will benefit.
  • The benefits and value proposition of the new technology solution.
  • A cost-benefit analysis that assesses ROI, such as:
    1. 1.Identifying time savings and reduced labor costs from a new solution.
    2. 2.Potential cost savings from consolidating multiple systems into a single platform.
    3. 3.How existing budget allocation will be better optimized.
    4. 4.How improved support services reduce unnecessary employee labor and resolve issues more efficiently.

4. The Value: Compliance Technology Built to Scale

Selecting a compliance technology solutions vendor is more than a transactional exercise. These relationships are partnerships and serve as an extension of your firm’s audit-readiness and ongoing commitment to compliance.

With a best practices approach, firms will have a system with the core functionality and capability to scale for future regulatory requirements and firm maturity.

Consultant's Corner

“Key Considerations for Co-Sourcing and Outsource Compliance” with Hank Sanchez from Bates Group offers practical ideas and considerations on what to retain support for, and how to build the case for budget approval.