Regulatory Change Management System Saves 20 Hours per Month

Regulatory Change Management System Saves 20 Hours per Month

Executive Summary

New Horizons Wealth Management, a rapidly growing RIA managing over $750 million in assets, struggled with the increasingly complex and time-consuming process of tracking and implementing regulatory changes. Their manual system, relying on emails and spreadsheets, created a significant risk of non-compliance and missed deadlines, potentially leading to costly fines and reputational damage. By implementing a robust regulatory change management system integrating Thomson Reuters Regulatory Intelligence with their existing project management software, New Horizons reduced their regulatory change management workload by 20 hours per month, allowing their compliance team to focus on proactive risk management and strategic initiatives.

The Challenge

New Horizons Wealth Management experienced significant growth in recent years, increasing their client base by 35% in the last three years. This growth, while positive, placed a considerable strain on their compliance department. The team was responsible for staying abreast of a constantly evolving regulatory landscape, encompassing SEC rules, FINRA guidelines, state securities laws, and privacy regulations such as GDPR and CCPA (California Consumer Privacy Act).

Previously, the firm relied on a manual process to monitor regulatory changes. This involved subscribing to multiple industry newsletters, monitoring regulatory websites, and attending industry conferences. Key information was then manually entered into spreadsheets, assigned to relevant personnel via email, and tracked through a series of follow-up communications. This system was inherently inefficient and prone to errors.

Specific pain points included:

• Time-Consuming Tracking: Compliance staff spent an estimated 25 hours per month simply identifying and cataloging new regulatory changes. This meant less time dedicated to proactive compliance efforts and client education.
• Increased Risk of Non-Compliance: The manual nature of the process made it difficult to ensure that all relevant regulations were being tracked and implemented effectively. Missed deadlines or incomplete implementation could result in regulatory fines. For example, failure to update their Form ADV Part 2A annually and deliver it to clients could result in a fine of $5,000-$10,000 per instance, depending on the severity and frequency of the violation.
• Lack of Centralized Repository: Information was scattered across various spreadsheets, emails, and documents, making it difficult to access and analyze. This hindered the firm's ability to identify trends and proactively address emerging risks.
• Inefficient Task Assignment and Monitoring: The email-based assignment system lacked transparency and accountability, making it difficult to track progress and ensure timely completion. This caused delays in implementing new policies and procedures and increased the risk of regulatory violations. A recent internal audit revealed that approximately 15% of required regulatory updates were either delayed or incomplete due to inefficient task management.
• Scaling Difficulties: As the firm continued to grow, the manual system became increasingly unsustainable. It was clear that a more efficient and scalable solution was needed to effectively manage regulatory changes and mitigate the risk of non-compliance. Failing to adapt could have meant hiring an additional full-time compliance officer at a cost of $80,000 - $120,000 per year.

The Approach

New Horizons Wealth Management recognized the need for a more proactive and systematic approach to regulatory change management. They embarked on a project to identify and implement a solution that would streamline the process, reduce the risk of non-compliance, and free up compliance staff to focus on higher-value tasks.

Their decision framework involved the following steps:

1. Needs Assessment: The firm conducted a thorough assessment of their current regulatory change management process, identifying key pain points and areas for improvement. This included documenting the steps involved in the process, identifying the resources required, and estimating the time spent on each activity.
2. Vendor Evaluation: New Horizons evaluated several regulatory change management solutions, focusing on features such as automated regulatory updates, task management capabilities, reporting tools, and integration capabilities. They evaluated solutions based on a weighted scorecard, with the following key criteria:
   • Accuracy and Completeness of Regulatory Information (30%): Assessed the vendor's ability to provide accurate and up-to-date information on relevant regulations.
   • Task Management and Workflow Automation (25%): Evaluated the vendor's task management capabilities and ability to automate workflows.
   • Reporting and Analytics (20%): Assessed the vendor's reporting and analytics tools, focusing on the ability to track progress, identify trends, and generate reports.
   • Integration Capabilities (15%): Evaluated the vendor's ability to integrate with the firm's existing systems, such as their project management software and CRM.
   • Cost (10%): Considered the overall cost of the solution, including subscription fees, implementation costs, and ongoing maintenance expenses.
3. Selection of Thomson Reuters Regulatory Intelligence: After careful evaluation, New Horizons selected Thomson Reuters Regulatory Intelligence (TRRI) as their regulatory change management solution. TRRI provided a comprehensive database of regulatory information, automated regulatory updates, and robust task management capabilities. They chose this specifically for its sophisticated AI that filtered out irrelevant changes, based on asset type, product offering, and client demographics.
4. Integration with Project Management System: To further streamline the process, New Horizons integrated TRRI with their existing project management system, Asana. This integration allowed them to automatically create tasks for regulatory changes, assign responsibility, track progress, and generate reports.
5. Implementation and Training: New Horizons worked with Thomson Reuters to implement TRRI and train their compliance staff on how to use the system effectively. This included developing standard operating procedures for managing regulatory changes and providing ongoing support to users.

Technical Implementation

The technical implementation involved the following key steps:

• Subscription to Thomson Reuters Regulatory Intelligence: New Horizons subscribed to the "Governance, Risk & Compliance" package within TRRI, ensuring comprehensive coverage of regulations impacting their business. The annual subscription cost was $15,000.
• API Integration with Asana: Using TRRI's API, New Horizons established a connection between TRRI and Asana. This integration was configured to automatically create tasks in Asana whenever a new regulatory change relevant to New Horizons was identified by TRRI. The API integration was handled by their internal IT team and took approximately 40 hours of development time.
• Rule Mapping and Task Assignment: A series of rules were configured within TRRI to map specific regulatory changes to relevant tasks in Asana. For example, a new SEC rule related to cybersecurity would automatically trigger the creation of a task to update the firm's cybersecurity policies and procedures. These tasks were automatically assigned to the designated compliance officer responsible for cybersecurity. Task assignment rules were configured based on subject matter expertise and existing roles and responsibilities within the compliance department.
• Automated Notifications: Notifications were configured within Asana to alert assigned personnel of new regulatory changes and upcoming deadlines. Automated reminders were also set up to ensure that tasks were completed on time.
• Reporting and Analytics Configuration: TRRI's reporting and analytics tools were configured to track the progress of regulatory change implementation, identify trends, and generate reports. This included reports on the number of regulatory changes implemented, the time taken to implement changes, and the number of outstanding tasks. They also configured automated dashboards to provide a real-time view of the firm's compliance posture.
• Custom Field Creation in Asana: Custom fields were added in Asana, such as "Regulatory Authority," "Regulation Number," and "Impact Level (High/Medium/Low)" to improve the tracking process of the regulatory changes.

The entire integration required approximately 60 hours of combined effort from the IT team, the compliance team, and Thomson Reuters support.

Results & ROI

The implementation of the regulatory change management system yielded significant improvements in efficiency and compliance:

• Time Savings: The most significant benefit was the reduction in time spent on regulatory change management. New Horizons reduced the time spent on this activity by 20 hours per month, representing a 80% reduction in manual tracking effort. This freed up compliance staff to focus on more strategic tasks, such as risk assessment, policy development, and employee training. This translates to approximately 240 hours per year. Assuming an average hourly rate of $75 for compliance staff, this equates to a cost savings of $18,000 per year.
• Reduced Risk of Non-Compliance: The automated system ensured that all relevant regulatory changes were tracked and implemented effectively. This significantly reduced the risk of non-compliance and potential regulatory fines. Prior to implementation, the firm had identified at least 2 potential compliance gaps that could have resulted in fines of up to $10,000 each.
• Improved Efficiency: The integration between TRRI and Asana streamlined the regulatory change management process, making it more efficient and transparent. Tasks were assigned and tracked automatically, and automated notifications ensured that deadlines were met. The improved efficiency also allowed the firm to scale its compliance efforts more effectively as it continued to grow.
• Enhanced Visibility and Reporting: The reporting and analytics tools provided enhanced visibility into the firm's compliance posture. Compliance staff could easily track the progress of regulatory change implementation, identify trends, and generate reports for management. This improved reporting allowed New Horizons to make more informed decisions about risk management and compliance strategy.
• Cost Savings: The $18,000 annual savings, minus the $15,000 TRRI subscription cost, yielded a net cost savings of $3,000 in the first year. More importantly, it avoided the potential $80,000 - $120,000 expense of hiring an additional compliance officer.

Specifically, the implementation impacted the following metrics:

• Time Spent on Regulatory Tracking: Decreased from 25 hours/month to 5 hours/month.
• Number of Potential Compliance Gaps Identified: Reduced from 2 (pre-implementation audit) to 0 (post-implementation audit).
• Average Time to Implement Regulatory Change: Decreased from 60 days to 45 days.
• Employee Satisfaction within Compliance Department: Increased by 20% (based on internal survey).

Key Takeaways

1. Proactive Regulatory Change Management is Essential: A proactive approach to regulatory change management is critical for mitigating the risk of non-compliance and ensuring that your firm operates within the bounds of the law.
2. Leverage Technology to Automate Processes: Technology can be a powerful tool for automating regulatory change management processes, freeing up compliance staff to focus on higher-value tasks. Explore available solutions and identify those that best fit your firm's needs.
3. Integrate Systems for Seamless Workflow: Integrating regulatory change management solutions with existing systems, such as project management software, can further streamline the process and improve efficiency.
4. Invest in Training and Support: Ensure that compliance staff are properly trained on how to use the regulatory change management system effectively. Ongoing support is also essential to address any questions or issues that may arise.
5. Regularly Review and Update Your Approach: The regulatory landscape is constantly evolving, so it's important to regularly review and update your regulatory change management approach to ensure that it remains effective.

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