Transcendent Compliance – Embed Activities to Enhance Profitability

The word compliance elicits capricious reactions. Bring it up on the office floor and team members become harried, reminded of the ever-increasing workload imposed by regulators. Bring it up in the executive suite and colleagues become vocal, expounding on every conceivable dimension of operational risk management. Both sets of responses are reactive, reflecting investment management challenges such as client reporting, regulatory reporting, investment risk oversight and corporate governance. Both sets of responses are also fully valid, albeit from different perspectives.

In his memoir Fully Alive, Chairman of Special Olympics Tim Shriver tells an interesting story about perspective. We’ve paraphrased the story here:

“President Clinton attended the 1995 World Special Olympics at the Yale Bowl, where a photographer noticed a group of athletes raising disposable cameras to their faces. But they were doing it wrong; they were holding the camera lenses to their noses. The photographer interrupted to show them the correct way to hold their cameras to get a photograph of the president. They watched politely, then one athlete spoke. “Oh, thank you, sir. But may I show you something? If you turn the camera around and hold your eye up to the viewfinder backward, it still works.
It works like a telescope and you can see the president very clearly. We’re using these little cameras so we can get a good view of the president. But thank you for helping us.”

The athletes in Shriver’s story knew how to use the tool they were given, and how the tool worked. Knowing this, they were able to use their tool unconventionally – to change the lens – in order to get a good view of the President.

Perhaps we can do the same. When we examine compliance tools in an unconventional way, we create opportunities to simplify the investment management compliance process and reduce the profitability impact of the compliance burden on the investment management firm.

The Cost of Compliance

Regulatory scrutiny continues to be a top agenda item in investment management circles. Keeping up with revised rules for regulatory reporting, strengthened examination and enforcement policies, and enhanced trans-continental cooperation among regulatory authorities is daunting. And expensive.