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Trust Your Instincts When Selecting a Compliance Consulting Firm. It is, after all, a Partnership – PART 2

What questions do I ask when hiring a compliance consulting firm? How do I make the final selection?
Friday, December 14, 2018

Submitted by: Carmela Ravi, Business Development Director, Red Oak Compliance Solutions

The relationship between a compliance consulting firm and a client is a partnership. It is a collaboration which is based on the delivery of excellent service and mutual respect.

This is the continuation of my previous article, “Trust Your Instincts When Selecting a Compliance Consulting Firm. It is, after all, a Partnership – PART 1”, where I addressed questions 1 and 2 of why you need a compliance consulting firm and where are the best resources to find one. In that article I listed the following four questions that need to be addressed to reach a level of trust and understanding between a client (or prospect) and a compliance consulting firm:

  1. Why do I need a compliance consulting firm?
  2. Where are the best resources to find one?
  3. What questions do I ask?
  4. How do I make the final selection?

 This article covers questions 3 and 4.

Question 3: Time to interview a Compliance Consulting Firm. What questions do I ask?

Now that you have narrowed down the list to 3-4 firms (or more, depending your firm’s due diligence process, policies and procedures, preference, and other requirements), it is time to start interviewing. This process is very similar to hiring an employee. What questions do you ask? There are questions that would be just for your firm’s needs and due diligence process. However, there are some common subjects that I found to be equally important:

  • Types of Services and Clients: What type of clients do you service? What is your core competency? What services do you offer? Ask them to elaborate and provide examples.
  • Firm Tenure: How long have you been in business? How many employees does the firm have? How many are consultants? How many are senior, junior, analysts and Partners? This can impact the fee charged, who will be assigned to your project, and if the firm has sufficient resources.
  • Consulting Team Background: What is your consulting team’s background? Do you hire securities attorneys, or, former CCOs, or former regulators, or former examiners (SEC, FINRA, NFA)? Do the consultants understand how to solve your pain by applying the right requirements with industry practices to match your firm’s business model and compliance needs? The answers can provide an insight as to the SME level (Subject Matter Expert) of the firm’s consultants. Ask the vendor to provide Furthermore, ask if their consultants are all employees of the firm, or, if they use contractors. If they use contractors, and you are ok with it, consider doing additional due diligence on the contractors and ask for their bios as well.
  • Consulting Team Tenure: If your goal is to build a partnership with a consulting firm, it is crucial to know how long their consultants have been working at the firm. What is the average tenure? What is the turnover? Why are consultants leaving? Alternatively, what makes it attractive for consultants to stay at their firm a long time?
  • Expectations: What is your turnaround time for your compliance need(s)? Ask them to walk you through how they would solve your need(s). Ask them if they can share who will be assigned to your project should you decide to move forward. Share what your expectations are and gauge their response.
  • Know your Budget: During this process, it is important to know what your budget is. However, it is not uncommon that you may not be aware of what a fair cost is for the service(s) you need. It is ok. Ask the vendors you are interviewing if they can help provide a comparison of services and fee in the market for similar projects.
  • Price and Terms: While it is important to know the price, it is similarly crucial to understand at the very beginning of the discussion how the firm charges (i.e., flat fee, vs. minimum flat fee, vs hourly vs. by project) and what their terms are. Are travel expenses included, or, additional? What additional fees will the vendor charge? Are there options? Ask them if there is any room to negotiate the terms and fee(s).
  • References: An experienced vendor can provide references. Besides asking if these references are similar in size and needs, ask the vendor at what point can they provide them and how long it will take.
  • Customer Service: What is your approach to customer service? Do you answer after hours, and on weekends? How fast do you answer? Is there a backup if your assigned consultant is not available? Would the backup know my firm and needs, or, do I have to fill him/her in? Think of the time and aggravation saved if there is a contingency plan.
  • How Frequently can you Call to ask Additional Questions? During the qualification process, a vendor should always be available to answer questions, even if you have not made any decisions yet. Pay attention to how responsive the vendor is, how quickly he/she returns your calls, or, answers your emails. This is not to be picky. Rather, at this early stage, you should feel comfortable that your questions should be answered, whether you chose that vendor or not.
  • Are they Listening?: This may seem an obvious expectation but, we may have experienced it less frequently than we would like. Pay attention if the provider is asking you questions to understand you, your firm, your pain point(s), your expectations, your culture. Listening shows not only respect for your needs, but also, it can prevent misunderstanding and assumptions further into future conversations.
  • What is the Vendor Looking for? If you are looking for a long-term partnership, is the vendor looking to become your partner and help you and your firm stay in compliance? Is the vendor looking to build a relationship?
  • Why Should I Choose You? The question is not implicitly exclusive for a sales pitch. This the moment for the provider to build a level of trust and share more insight about the market, or other pertinent information about the discussion and your compliance needs.

 Question 4: How do I make the final selection when choosing a Compliance Consulting Firm?

Now that you have done all the legwork, it is decision time. Ultimately, the choice is both a personal and a professional one. You may create a metrics with a scoring formula to assess the best vendor, as some firms do. You may have to discuss it internally, get buy-in and budget approval. You may need to get Legal, Operations, Purchasing, Project Management and other internal stakeholders involved. The internal requirements can be several and varied.

However, all the research that is done leads to one thing: trust.

You try to build trust with the prospective vendor. You trust the vendor has the right experience and understanding of your firm’s culture, model and compliance needs. You trust that you are making the right decision to protect and alleviate the firm’s regulatory risks. There is no mathematical formula at the end of the day. What you are left with, is the trust in your professional and personal instincts, and your ability to re-evaluate and switch strategy.

I hope you have enjoyed this reading and I encourage you to reach out to me for any questions. I will be glad to provide you with my input. You can reach me directly by email cravi@redoakcompliance.com, or via phone 512-948-0080.

For more information about Red Oak Compliance Software and Services Solutions, Partnership and/or Integration Opportunities or to Schedule a Demo, please visit us online, email us sales@redoakcompliance.com or give us a call at 888-302-4594.




About Red Oak Compliance Solutions

Red Oak Compliance Solutions is the global advertising review software of choice in the financial services industry. It is a comprehensive suite of SEC 17A-4 compliant features that are 100% books and records compliant and provides clients with 35% faster approvals and 70% fewer touches or better. We also offer Smart Review(SM), which solves for the storage and maintenance of disclosures, helping firms reduce risk, decrease review times, and increase the speed of distribution of marketing materials. Smart Registration(SM) automates the licensing and registration management process to help reduce regulatory risk and time spent on manual processes. Overall, Red Oak allows firms to minimize risk, reduce costs, and increase compliance review process effectiveness and efficiencies.