Managing Your Search for a Compliance Consultant

Word of mouth is probably among the most preferred ways to hire, whether the hire is an employee or a service provider.  In addition to this useful method, we offer the following tips for hiring a compliance consultant to help ensure the best fit and value:

  1. Scope of Services.  The most important factor in selecting a consultant is determining what your needs are.  If you do not know or are considering more than one scenario, talking to your peers might be helpful to determine how others utilize their consultants.  This is also a good place to start for recommendations.    The scope generally falls into three buckets:  project-based (such as a mock exam), ongoing compliance support, typically for firms with substantial needs, or consulting upon request, typically for firms that handle the majority of compliance work in house.   On the latter two, be sure to check pricing, as these might vary significantly and include/exclude certain services.
  2. Cast a Wide Net.  Once you have determined your needs, begin researching consultants, perhaps starting with firms recommended by your peers or other service providers.   Online searches and industry publications may be other sources.    Particularly if you have a long list, consider how to organize all the detail in a way that allows meaningful comparison; asking prospective consultants to complete the same Request for Information is one way of doing that.  You may also simply collect the information and organize it yourself in a spreadsheet to compare the variables that matter most.
  3. Best of Breed and Expertise.  Consider not only your scope of services (e.g., if you are looking for a mock examination, which consultant seems to be the best at that?) but your type of business, registration status and even strategy or platform to determine if any consultant seems to have expertise in these areas.
  4. Scalability.  Particularly if you are a startup, consider whether or how a consultant can work best with your business as it grows.   This is also a key issue for multi-platform firms, dual-registrants or others with significant complexity to their business.
  5. The Team.  Will your consultant be working closely with other service providers, such as fund administrators, accountants or legal counsel?  If so, ask them for their recommendations.
  6. Fee Structures.    Similar to the first point, this generally falls into three buckets:  flat fee, some form of periodic billing, or hourly.  Project-based engagements are frequently charged as a flat fee, making cost comparison relatively simple among multiple consultants.   However, make sure you understand what is included in the flat fee and when you will be billed, e.g., upon completion, at commencement or some variation of these.

Not all consultants work on an hourly basis; others may do so exclusively.  Be mindful of what your needs are when evaluating hourly arrangements.  Generally, the more robust your needs, the more you should focus on an arrangement that involves periodic billing for a specific suite of services.  Periodic billing arrangements vary significantly in terms of frequency (monthly, quarterly, annually) and levels of services.   If you need to save money, consider the types of compliance-related activities that you can keep in house and choose your consultant and suite of services accordingly (for example, controls, review and testing around trading, fee calculations and other core operations can sometimes be easily incorporated into existing workflows, without the consultant’s day to day involvement).

Regulators expect firms to not only be aware of the applicable requirements and implement them, but to do so in a way that is tailored to their particular business and risks.  When selecting a compliance consultant, be mindful of this expectation and choose the consultant whose experience, knowledge and approach works best for your business.

13,718 thoughts on “Managing Your Search for a Compliance Consultant

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