Compliance Is Coming Out of the Shadows

The compliance function in financial services businesses is fast changing to keep up with the growing number, complexity, and variety of regulations. The key point is that if the mindset to compliance changes from a simple “tick the box” assurance process to a business advisory approach, then a more robust business will be developed with the right foundations. Put another way, a compliance function structured the right way can add significant value to the business. There is an increasing risk that without a robust compliance function there is no business. To be successful, the compliance monitoring function must be highly automated. So, there needs to be substantial investment in the technology solutions that can help monitor transactions and retain documentation. If you want to learn more, review a paper issued by the Ethical Corporation ( in January 2005 called: “Capitalizing on the New Compliance Mindset.”

What many forget is that the behavior of people drives transactions and business activity. Therefore, managing the behavior of people should be a much larger component of the compliance function rather than just a review of the paper flow. Again, such strategies can be built into the compliance systems. It is interesting that in the new era of compliance, that the more proactive firms are starting to hire behavioral finance specialists in their compliance departments.

They Holy Grail will be reached when the firms have systems for comparing the behavioral biases of a person (what they do) to what they should do. The starting point is collecting the right data about the client up-front in the client service process, including an objectively measured behavioral assessment. Without the right information being used as the foundation of a solution, it will never be suitable. Interestingly, if this upfront behavioral discovery process is handled properly, it will be very engaging for the client leading to higher revenues for the firm and reducing risk exposure of litigation.

So, a well-structured behavioral discovery process will enable both compliance and relationships to be at the core of building a client-centered business. Compliance can now come out of the shadows.

Hugh Massie

Hugh Massie

Hugh Massie - President and Founder of DNA Behavior International

Hugh Massie is a Behavioral Finance Strategist helping people and organizations worldwide "behavioralize money". His purpose is to guide people to be Behaviorally SMART for achieving greater financial empowerment so they can live with meaning and unlock their human potential.

Hugh liberates investors, advisors and organizational leaders with a unique blend of financial personality and economic insights to make improved life, financial and business decisions.In particular, he helps people become more self-aware so they do not make emotional decisions under pressure which sabotage their relationships and long-term horizon goals.

Hugh has over 60,000 hours of experience serving millions of investors with assets of $1 to $1 billion+ and the leaders of more than 2,500 businesses in 123 countries. (

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