“The path of the righteous man is beset on all sides by the inequities of the selfish and the tyranny of evil men. Blessed is he who, in the name of charity and good will, shepherds the weak through the valley of the darkness, for he is truly his brother’s keeper and the finder of lost children”
— Ezekiel 25:17.
Ages ago, when I thought twitter was a good place for the reasoned exchange of views, I’d often engage those complaining about “excessive red tape and un-necessary regulation”.
They have a point; if you ignore every regulatory failure, adviser fraud and corporate misconduct (and exclude from consideration unconscionable conduct, misrepresentation, consumer detriment, any expectation of honesty and fair-dealing and any requirement for consideration or competency) then their contention that any degree of regulatory intervention is undesirable (except, of course, for mandated superannuation and insurance requirements) makes complete sense.
Alternative history has its place but we should, but in the real world, the current focus on compliance is the inevitable result of these underlying, and often recurring, failures.
At the risk of triggering some readers, while increased compliance obligations can sometimes have a (sometimes significant) human and financial impact, I understand their necessity. What might be even more galling is my belief that compliance, hasn’t made us worse-off, but has given us the tools and techniques to help us transform an advice industry into an advice profession.
In previous articles, I’ve explored why compliance is “meh” and why I think compliance is often poorly-served by compliance experts. I stand by those opinions, but I also think that compliance is awesome.
I appreciate that not everyone might agree with me (at least initially), so I’d like to briefly outline five reasons compliance is awesome (and a great career path for creative and curious people).
1. Compliance is mission-critical
Despite being poorly defined, and misunderstood, Compliance is inherently interesting.
It’s multi-disciplinary, challenging, complex, constantly evolving and dynamic.
More importantly, it’s a critical function.
I appreciate this may not be a popular opinion, and a triggering one for many people, but the reality is that if you believe in the value of advice and want to make quality advice accessible to more Australians, then specialising in ‘compliance’ is the surest path to achieving this goal.
Clearly, it won’t be an easy role but your capacity, over the longer-term, to shape processes, and influence conduct, should not be underestimated.
More importantly, you have an explicit authority (and a moral obligation) to focus on “what ought to be done”. If you can avoid becoming mired in the unthinking formalism so beloved of technologists and risk-managers, you’ll understand that your role is not to frustrate advisers but to facilitate their provision of quality advice.
But, as a competent professional, it’s important to understand that compliance is not a Mary-Sue role, it requires you to both restrain and enable; while you will educate, mentor and inform advisers, you will also be required to police and penalise them.
The trick is to understand the difference and to appreciate how best to achieve the desired outcome.
Compliance staff have a professional obligation to be vigilant and constructively-critical, but a moral obligation to be fair and open-minded.
For those that eschew simple solutions in favour of root-causes and context, and for optimists that prefer nuance to novelty, compliance is an interesting, promising and business critical function that grapples, on a daily basis, with complexity, ambiguity and commercial necessities. It is tiring, and sometimes dispiriting, to try to inspire the better angels and reconcile the seemingly irreconcilable, but if your ambition and your optimism is more limited, then account-management, sales and software development may suit you better.
People complain about “compliance” because they’ve generally only been exposed to the static and formalistic approaches preferred by incrementalistic advisers and licensees. To minimise risk, they prioritised form and industrialised processes over individual judgement, likely outcomes and intent.
This is not the failure of compliance, but the failure to conceive, and operationalise, compliance as anything other than a control mechanism.
The opportunity you have is to reimagine your critical function as an ethical optimiser and facilitator rather than a source of burdens and impositions. By explicitly and creatively focusing on sustainability of businesses you’ll advise, you’ll inexorably shift perceptions as inevitably as you increase profitability and reduce regulatory risk.
Make no mistake, “compliance” is a strategic management discipline that more accurately seeks to address fundamental human issues – motivation, incentives, behaviour, intent, acts and consequences – than delivering mainstreamed advice and industrialised processes.
Admittedly, it’s important but not always interesting to those you’ll support.
2. Compliance is dynamic
“Understanding the reality that compliance is both dynamic and driven by efficiency empowers firms to evolve past mere conformance and into wealth-maximizing innovation.”
— Associate Professor Robert Bird
Financial services regulation in Australia is complex, inter-dependent and frequently changing. The reality is that financial-services regulation is a syssiphistic (or quixotic) attempt to both impose, and build, discipline on an industry reluctantly transforming into a profession.
It’s also as much art as science, so new regulations evolve, or emerge, with both frightening speed and alarming regularity.
Change, complexity and ambiguity terrify most people, but it’s these characteristics that make compliance such an appealing discipline. You’ll be stressed, under-resourced and under-appreciated, but you’ll never be bored, and you’ll be embedded in a role that demands dedication, deep-thinking and a synergistic mind.
Plus, because the work is always changing, you’ll need to invest in your professional development to ensure you maintain your expertise over an increasing area of responsibility (that now includes, for example, data management, cyber-security and legal reasoning).
3. Compliance values experience
There are any number of providers that position compliance as an “entry-level” role that doesn’t require deep knowledge of financial services.
I see these providers as equivalent to those licensees that believe that “risk advice” doesn’t require the deep knowledge of financial services required of investment advisers.
This view, as I’m sure you’d appreciate, fails to appreciate the profound consequences of getting it wrong.
In fact, I’d suggest that both REP515 and the Royal Commission, highlight the deficiencies of this approach.
Thankfully most licensees, or most competent licensees, have learned the cost of inexperience and ineptitude.
Regardless of your age, if you have relevant experience, curiosity and a growth-mindset, then compliance is a discipline that will both provide you with job security and the autonomy to model competence and capability.
4. Compliance is challenging
“A jack of all trades is a master of none, but oftentimes better than a master of one”
— Traditional quote
“Comments sections” are dominated by people that see compliance as, at best an unnecessary burden and a commodity that’s ubiquitous, formulaic and prescribed. They can’t conceive of innovation in this space because, they’ve a legacy of unwavering focus on formal mechanisms, industry norms and lag indicators.
It’s ironic that our willingness to accept that “past performance is not a reliable indicator of future performance”, does not extend to our view of our compliance teams.
As a contrarian, this is the reason why I find compliance particularly appealing.
If you want to be part of a profession that embraces the challenge of change management, then compliance will test and stretch your capabilities more than any other role in financial services. The industry may tolerate incrementalism, but the conservatism adopted by the larger licensees is self-defeating and ultimately self-destructive. Creating a balanced, commercial and constructive compliance philosophy is not easy, but it can be done by those that are capable of rising to the challenge and willing to look forward as much as they look backwards.
This shift in perceptions will require more than a few discrete nudges. But looking forward, embracing innovation and being willing to break with tradition will also assist you to transition your Compliance department from a retrospective and bureaucratic function to a strategic management function.
5. Compliance provides visibility and access
“With great power, comes great responsibility.”
— Stan Lee
Compliance may be poorly understood, but it remains a lightning-rod for executive attention. Few managers will casually dismiss advice that identifies a real possibility of regulatory risk.
As a compliance professional, even junior staff will have access to senior management and be accorded a level of respect and regard that you may think is underserved.
It’s not. You have specialised knowledge, hard-earned wisdom and profound understanding of the business and industry in which you operate. Competent Licensees, and great advisers, accept this truth and acknowledge the significant value you offer.
Don’t underestimate your influence.
But don’t over-estimate your influence either.
The reason why compliance is awesome because, unlike other roles, it empowers you with a mandate to lead change and to shed the comfortable tradition of a bureaucratic and often reactionary function.
You should embrace the opportunity it provides to you to engage with the business on a strategic level and work assiduously to add value. Remember that your role is not to avoid all risk or prevent business being done, but to optimise the business’ capacity to run a sustainable, productive and consistently profitable business.
Working in compliance is awesome, but not easy. People generally abhor complexity and change, but you’ll have an incomparable opportunity to understand, advise and lead. Seize the opportunity to do so because, unless you do, an advice profession is unlikely to emerge.
