Years ago, as a partner in a small advisory firm I was asked to review and update our compliance program. This firm was a bit more complex than most, in that we had a pretty expansive set of outside shareholders, contractors and advisory board members in place. When I got to the topic of reviewing "roles" of each of these individuals I got a bit stumped. Who exactly were our "access persons"? Supervised persons?
Fortunately in most wealth management business models, determining "who's who" in your advisory firm is fairly simple ..assuming you understand the SEC's definitions of each role.
Chief Compliance Officer (CCO)
The CCO must be empowered with full authority to develop and enforce your firm’s compliance policies and procedures.The CCO and designees must be competent and knowledgeable regarding the Investment Advisers Act of 1940 as well as an securities laws that apply to your investment process.
Key Takeaways: Be able to demonstrate that your CCO is knowledgeable of securities regulations and has sufficient authority to enforce and affect change.
Investment Adviser Representative (IAR)
Key Takeaways: Essentially anyone that provides (or sells) advice for your firm will be considered an IAR. With the exception of administrative duties (like answering the phone, taking messages, or setting up meetings) everyone that has client contact should be an appropriately-licensed IAR of your firm. This includes solicitors.