Preparing for 2022: Compliance Budget Considerations, Priorities, and Helpful Tips

For SEC registered investment advisers, the end of the year brings many opportunities and unique challenges. It’s a time to reflect, evaluate, and plan. This blog is the first in our 2021 CCO year-end roadmap series. Have a question or topic you’d like to see covered? Contact us here.  

As we enter the second half of 2021, it’s time to start preparing for 2022 and establishing a compliance budget for the upcoming year. In a recent ACA poll, we found 62% of compliance budgets will remain flat in 2022, which is similar to what we saw in 2021. Over the past year, various compliance testing programs and schedules were adjusted to accommodate the aftermath of Covid-19, but as life goes back to normal, next year’s compliance programs and budgets must be prepared. With increased initiatives and focus areas and potentially little change in budget, compliance teams will need to stretch their budget to effectively meet regulatory and investor obligations. 

To help firms planning for their 2022 fiscal year budget, or those adjusting spend to tackle new initiatives, get started, we have gathered from compliance professionals tips that will explain the foundational needs of a compliance budget, how that looks in action, and how to prepare for the unexpected.  

• Analyze and review 2021: The first step of developing the foundation of your compliance budget should be reviewing the past year. Taking time to reflect and conducting an internal audit will help you establish your needs for 2022. This can be done by conducting risk assessments, gap analyses, assessing technology needs, and reviewing the compliance program annual review. This initial evaluation should focus on any potential gaps or deficiencies that should be of focus in 2022.  
   

• Evaluate the regulatory horizon: Take time to think about how upcoming regulatory changes, compliance dates, and priorities like the SEC Marketing Rule, the SEC’s new focus on ESG and cyber programs, or the increased threat of ransomware may impact your compliance priorities and where you invest your time and resources. Are there any areas that will need additional focus and spending behind them to enhance your program given the developments and shifts in the industry?  
   

• Resolve any outstanding items and update the compliance calendar: Next, it’s important to close-out any outstanding regulatory examination items before establishing the foundations of the following year’s compliance budget. Ensure that your compliance calendar is up-to-date to help ensure that if any reassessment is needed, there is adequate time to do so.  
   

• Establish compliance program parameters: Take time to determine what elements of compliance your program and budget will include. Collaborate internally to establish where spending will come from, and how much will be allocated to cybersecurity, risk management, regulatory technology, ESG, performance, etc. 
   

• Define priorities and determine a timeline: Finally, it’s important to define any top priorities for your firm. We surveyed over 1,100 compliance professionals at ACA’s 2021 Virtual Spring Conference and found the top 3 priorities to be marketing and advertising , cybersecurity/privacy, and ESG. It’s helpful to have priorities defined early so the compliance budget will have properly allocated funds to what is most important to the individual firm. Additionally, these priorities should also incorporate the SEC top priorities for 2021, this will help you get ahead of any regulatory expectations that will be in future examinations.  
  
   

  

Planning for the unexpected  

A compliance budget incorporates all regulatory needs, but it’s also important to develop a program that will work as time goes on and is equipped to handle any unforeseen events.  

A good way to help prevent any unexpected mishaps in the compliance program is to utilize automation and technology solutions. Allocating funds to tech can help mitigate human error and help alleviate some burden on compliance professionals. Additionally, outsourcing compliance responsibilities can help balance workload and ensure that firms can stay on top of their compliance calendar. Utilizing such resources may be something that your compliance budget should consider.  

Finally, once the compliance budget is set and in action, it’s imperative to review and reassess as 2022 develops. Take time to ensure all your needs are covered and any regulatory priorities are being met; re-evaluate and update your budget as the year develops. Reviewing and reflecting on the compliance budget throughout the year helps ensure that everything is running smoothly and efficiently.  

How we help 

ACA can help firms revisit 2021 developments and items on the 2022 regulatory landscape. As you undergo your 2022 budget planning process, if there are any areas where you would like to explore additional assistance or services, please reach out to your ACA Consultant or request a member of our team to contact you directly here. 

Looking to end 2021 on the right foot? ACA can help your firm wrap-up overdue tasks and prepare for the year ahead.  

• Gain an extra hand with Secondment and Staffing Assistance Solutions
  Have you fallen behind schedule with your compliance testing and surveillance? Need an extra hand to assist with your annual compliance review? With year-end clearly in sight, we are available to assist with any short-term staffing needs.  
• Prepare for regulatory changes and stay ahead of the curve with a gap analysis or risk assessment. ACA can assist with: 
  • Marketing Rule Gap Analysis and Implementation Support  

  • Compliance Program Reviews, Mock Exams, and Gap Analysis 

  • Privacy Assessments​ 

  • Cybersecurity Risk Assessments and Compliance Readiness  

• Automate and streamline compliance and risk management tasks with ACA’s Regulatory Technology solutions.
  Our ComplianceAlpha^® software platform helps firms automate manual tasks, identify risk through enhanced surveillance capabilities, derive deeper insights through connected data, simplify the submission of requests and disclosures for employees, and free up valuable time for more strategic, higher-value tasks.  

• Gain peer insights and benchmark your compliance program with ACA’s Compliance Leaders Network (C-LEAD).  
  C-LEAD is a new membership-based group of compliance thought leaders, backed by ACA’s dedicated research and analytics team and staff of experienced consultants. C-LEAD members gain access to exclusive research, benchmarking, and events designed to help CCOs and senior compliance leaders make informed, data-driven decisions on top functional challenges. Sign-up here for more information.  

Contact us