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Regulation and Compliance > State Regulation

A few good compliance officers

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Almost four in 10 financial advisors have been told by compliance officers they could not engage in an activity the advisor knew was both legal and within regulations.


That is the most troubling finding of a new study of 100 financial advisors by Katherine Vessenes of Vestment Advisors Inc. of Minneapolis.

The 2007 Financial Advisor Compliance and Legal Concerns Survey asked advisors around the country, representing 48 different broker/dealers, about compliance concerns, their views on the quality of their internal and external compliance departments, and how they would change compliance departments for the better.

The findings tell a scary tale about the state of compliance and how dealing with related issues can slow an advisor to a crawl.

Nearly 13 percent of respondents say they are losing at least one full day of production each week due to compliance issues and paperwork. That puts a sizable obstacle in front of your sales potential.

That 39 percent of survey respondents said compliance officers have told them not to engage in something within regulations is an issue that begs a closer look.

“This has become such a common complaint that I think it needs to be addressed in the industry,” says the woman who conducted the survey, Katherine Vessenes, president of Vestment Advisors Inc. “One possible reason is that it is difficult to get experienced and competent compliance personnel. So possibly these incorrect edicts are the results of newer, under-trained compliance staff.”

Vessenes continues to say another factor could be broker/dealers who have been burned many times in the past and have decided to “take the rules, and then tighten them even more, to protect themselves. Either way, it is confusing to registered reps and not necessarily helpful to the investors.”

We want to know what you think. Is there really a problem here? Is the industry is being hampered by unqualified or overcautious compliance officers?

You need to be able to achieve compliance in a way that doesn’t disrupt your business. Compliance needs to be embraced as a business process to be managed over time, but it certainly shouldn’t be taking up one-fifth of your time.

If this is an issue that is impacting your business, please take a minute and e-mail your comments to [email protected]. What you say will help to form the basis of how we approach our coverage of compliance.


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