Compliance Training

Beyond the Basics

Michele Lipschultz, MBAManager, GCO/Enterprise L&DThrivent Financial

Pam Ziermann, CSCPSenior Vice President ComplianceDougherty Financial Group LLC

Michelle Canela, MSL, CSCPSr. Compliance ManagerINTECH Investment Management LLC

AGENDA• Training Relevance and Alignment

• Internal vs. Vendor Creation

• Training Fun and Effective

– Game Share

– Gamification

• Develop a Plan and Library

• Other Topics Ideas

– Training Approaches

Training Relevance & Alignment

• Integration with the Business– Opportunities to Partner-WIFY– Look, Read, Try & You Shall Find– E.g., New sales tools/processes-help train with

compliance considerations/ perspectives?– Strategies-Align/support with training (Fin/Fraternal

Integration, New Bank offering, Financial Advice center)

• Firm’s mission statement or strategic goals. – Are any of the aforementioned tied to an aspect

of the compliance program or culture?

Integrate Regulatory Considerations Business

• Review Annual Strategies & Goals-where does compliance fit, support, align?

• Leverage partnership on Training Requirements-Business Training, Compliance Perspective

• Be the regulatory liaison • Train Management• Use Newsletters

Bake It In...New/Existing Agent/Employee Training

• Set the tone - Interview & New Employee Training – Leverage agent resources/tools– How to-Effective, Engaging, Relevant Training

• Maintain a Pulse with Agent Leadership• FUN with Training (Monopoly, Jeopardy, Amazing Race,

movies, Springsteen)– Creativity and Innovation Worth Gold– Use gimmicks (walls, flags)

• Using 3rd parties• Share the WHY… with the WIFY

Training Relevance & Alignment• Risk Based Approach –

Training for Risk Mitigation– Leverage Assessments-– Complaint Patterns/Trends– Regulator Exam Priority

Letter/Annual Focus– Target Training -Most critical risks

via ACM, FE, Sup Element, Code• Risk and Role Based Approach

– Increasing Relevance = One Size Fits All

– Field vs. Corp– Broker Dealer RRs vs. Investment

Advisor RRs

• Your firm’s risk assessment– Have you adequately informed

employees of the procedures/controls for your firm’s top risks?

• Recent or recurring incidents or trade errors. – Have any new procedures

arising from the event(s) been properly communicated to all affected employees?

Tips & Tricks Share/Teach-back

Your Ideas-Effective & Relevant Training

Internal vs. Vendor Creation

Vendors

Pros• Save Time• Ability to track• Diversify your training

portfolio• Leverage a skill set

that may be absent in your firm

Cons• Canned training• Weak Instructional

Design• Cost• Relevance: Firm

Policy different from training

• Requires too much customization

Negotiate, Negotiate, Negotiate

UNDERSTAND THE TECHNOLOGY, SERVICE

SUPPORT

Vendor Tool Box • Vetting- Key Questions • Is It Check the Box?• Instructionally Sound?• Customizable w/low cost?• Frequency of Content

turnover and Course reviews?

• Other Considerations in Diligence

Training Fun and EffectiveGerontologist video The Bully-Id Theft/AML

Effective Game Ideas

• Compliance Feud• Who Wants to be A

Millionaire? the CCO?• Race Track Theme-Day

in the Life of a RR• Monopoly • Sports Theme

Make it a Competition

Gamification

Play and evaluate a variety of games

Familiarize yourself with

the game elements and

how to use them

Think about

the learning objective and then

the game

Test your game

Interactive Training Activity

Create-Interactive Training Program

Develop a Plan and Library• Use your compliance testing calendar as a

guide.– Once you have a list of training topics you want to

cover, compare it to your testing calendar. Are there training sessions related to testing topics?

– Combine the testing and training calendars (if not too complex).

– Arrange training around your firm’s cycles; i.e., are certain times of the month/quarter/year that are better than others.

Develop a Plan and Library

Save your training!• The training created this year is the

starting point for the next session.• Modify your materials every time it is used

to keep it fresh and interesting.– Incorporate feedback received– Update stale media elements– Change things up, keep repetition to a minimum– Revisit topics not covered for some time

Develop a Plan and Library

Save your training!• FINRA Continuing Education Assessment

–New Products–New Branches–New Rules–Complaints

Sample Training Library

HANDOUTPROVIDED

Training Approaches &Training Metric

How-To’s

Training Approaches• Team Agreement• Group/Interactive Sessions• Quizzes• Videos – Commercial, Customized, or

links.• Computer-based, multimedia• Just in Time Training• Follow-ups to keep it fresh

HANDOUTPROVIDED

Training Metrics-How ToHow Do You Measure?How Do You Quantify

the Impact?

Objectives

• Know Your Training Objective(s)• Kirkpatrick Four Levels - handout• Utilize course tests and evaluations

– Knowledge Transfer• Behavior, Attitude and Skill Set

Documentation and MLC Awareness• 3,399 Completions• 34% Increase in Knowledge

2012 Blotter Training • 3 Courses – Average of 450 completions

each • Average of 33% Increase in Knowledge

KYC and New FINRA Rules• 3,113 Completions• 37% Increase in Knowledge

Investment Advisor – PTA Reporting• 372 New accounts disclosed after June 2013

training

How Training Impacts Business

How Training Impacts BusinessPre-Test Post Test

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

42.4%

75.3%

FBS 201 – Membership

Pre-Test Post Test0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

35.6%

72.8%

FBS 202 – Purpose Driven Definitions

Pre-Test Post Test0.0%

10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%90.0%

100.0%

67.3%

90.2%

FBS 203 – Operating Under the Lodge Sys-tem

Pre-Test Post Test0.0%

10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%90.0%

67.3%

87.8%

FBS 204 – Lutheranism, Our Common Bond

Pre-Test Post Test0.0%

10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%90.0%

53.9%

81.9%

FBS 205 - Fed Tax Exemption

Pre-Test Post Test0.0%

10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%90.0%

100.0%80.6%

92.7%

FBS 206 - Metrics and Our Mission

Fraternity Benefit Society (FBS)How Training Impacts Business

Compliance TrainingBeyond the Basics

Questions?

Appendix

Interactive Training Activity – Activity/Interaction HandoutQuestions • What format would you use to train?• Can you come up with activities for the training

participants?• What inexpensive props can you use?• What is the objective of the training?

– Build Awareness-New Information – Change a behavior or skill set– Teach/enhance a skill set

• Who is the Audience? – Consider appropriate level of creativity, fun, and

gamification– Geographic location(s) considerations

• Venue Selection-Online, Live, webinar– Dictate the type(s) of activities, interactions, practical

application– Groups/teams, post testing, see it, try it, do it

• Length of Content-– Chunk it, use articles/emails as reinforcement

• Best approach(es) based on the above:– Games, practical application via group case studies,

scenarios, role plays, peer to peer teaching, videos, testing vs. training, collaboration with other applicable training

Tools/Resources:• Games

– Competitive activity to reach a goal, conquer an obstacle, overcome a challenge, etc.

– Stimulates critical thinking, encourages memorization

• Role Plays• Case Studies/Scenarios• Stories/Storytelling

– Relevant to firm, e.g., If It Bleeds It Leads– Dictate the type(s) of activities, interactions,

• Use Polling for Peer to Peer teaching– To ask relevant questions; to tap the knowledge

and experience in the training

• Small Group Discussions• Q&A Sessions

– Effective for updating skills vs. teaching new skills

• Question Cards– During the lecture, ask participants to write

questions on the subject matter. Collect them and conduct a quiz/review session.

Training Approaches - Handout

Team Agreement Example

We agree to:• Uphold the values of the mission

statement.• “When in doubt, ask Compliance.”

Training Approaches - Handout

Group/Interactive Sessions• Small team interaction and

learning• Practical application of the subject• Peer reinforcement

Training Approaches - HandoutQuizzes• Individual Tests• Group Tests

– Collegial, foster interaction• Tests how effective the instruction has

been.– Areas of missed communications surface

• Can testing replace training?

Training Approaches - HandoutVideos – Commercial, Customized, or links.• Produce a training video covering actual

compliance problems your firm has experienced and what it learned from those experiences.

• Use as an adjunct for live training

Training Approaches - HandoutComputer-based, multimedia• Bad live training is as bad as bad

computer training.Advantages Disadvantages

ProvableLess opportunity for

questions

Consistent messaging to audience No personal interaction

Reaches everyoneInability to have live instructor to detect

problems

Training Approaches - HandoutJust in Time• Arranging training to be provided at the point an

employee needs it.– An e-mail reminder to client-facing staff regarding gift

and entertainment limitations and compliance preclearance requirements before various sport season openers or before winter holidays.

– Review personal trading rules with a new employee as part of the onboarding/orientation process.

Training Approaches - HandoutFollow-ups to keep it fresh.• Require managers/supervisors to report back with in a

stated time on steps they have taken to assure their subordinates’ understanding of and compliance with what was covered in the training.

• When appropriate, follow up with a “favor” if your budget allows:– Rulers with “Compliance Rules” on it.– Monitor labels with safe communication tips.– Fun size bars with “Being compliant is SWEET!”

Training Library - Handout• Required training topics and other

topic ideas• Advertising/Marketing• Alternative Mutual Funds• Anti-Money Laundering• Business Recovery• Communications with the Public• Complex Products (non-traded

REITS, mortgage backed securities, high-yield/hard to find securities, annuities)

• Concentration • Conflicts of Interest (how to identify,

manage and approach)• Corporate Finance (fairness opinions,

private offerings, resale of unregistered restricted securities)

• Custody• Customer Accounts, Trade &

Settlement Practices• Documentation (failure to adequately

explain risk vs. return, liquidity and leverage of)

• Due Diligence

• ERISA• Errors• Ethics• Expert Networks• Fees (Performance)• Insider Trading (use and handling of

non-public information)• IT/Cyber Security• Managed Accounts/Fee based• Margin • Market Manipulation• Markets, Exchanges & SRO’s (FINRA

oversight, Dodd-Frank, risk exams)• Money Market Funds• Municipal Advisors• Municipal Securities (new &

secondary offerings, continuing disclosure, sales highlights/private placements, bond offering letters, Supervisory requirements, 529 securities and SMMP’s)

• New Emerging Issues (core risks)• Options (disclosure document,

EOW/FLEX)

• Outside Business Activities• Personal Trading• Privacy• Product Knowledge and Related

Supervisory Considerations• Referrals• Research Reports and Disclosure• Retirement Rollovers/IRA’s• Sales Practice, Handling of Accounts

& Supervision • Senior Investors• Social Media (policy/trends, blogs)• Soft Dollars• Suitability • Telemarketing • Trading Practice and Abuse of• TRACE (dissemination)• U-4/U-5 (what is considered

disclosure?)• Valuation/Pricing

Gamification - Handout

• Conflict:– To peak interest, use some sort of conflict– Conflict has many forms

• It always represents a challenge for the learner to overcome

• Challenges=could be physical obstacles, combat with another player, or a puzzle

Gamification - Handout• Collaboration and/or Competition:

– With learning games, cooperation is often a better element to use than competition alone

– Direct competition with other players can demotivate learners or set up a negative dynamic

– In contrast, cooperation between players to overcome a game challenge can often motivate players and foster teamwork.

– Cooperation gets people working together; competition pits people against one another. • Only one person or team wins—while everyone else loses. The

players’ focus is very different depending on which element you employ or how you combine the two elements together. Competition can be appropriate, but you need to consider the outcomes it can produce.

Gamification - Handout

Strategy and Chance:

• Strategy puts CONTROL into the learners’ realm in the form of decisions that affect gameplay or their odds of achieving the goal.

• Games based heavily on CHANCE can put a learner in a highly reactive mode, one where they have little control over the outcome.

Gamification - Handout

• Incorporate entertaining elements to keep your audience engaged. – Related video clips

• Search relevant terms like “compliance training” on YouTube and you get results like B. Braun USA’s “Corporate Compliance and Singing Prisoners,” a comical take on repercussions for excessive entertainment, or “Compliance Babies,” where twins babble is translated to explain the need for compliance to your CEO.

Gamification - Handout

• Current media elements; e.g., when presenting on the topic of black swan events, include an image from the “Black Swan” movie.

• When appropriate, follow up with a “favor” if your budget allows:– Rulers with

“Compliance Rules” on it.

– Monitor labels with safe communication tips.

Evaluation - Handout