Younger workers are growing up in an age of the Consumer Financial Protection Bureau (CFPB), the Financial Industry Regulatory Authority (FINRA), and an embattled but still potent Environmental Protection Agency (EPA).
The influx of new and updated rules, regulations, and laws in the financial services, healthcare, telecommunication, and other sectors has created an increase in the need for qualified and ethical individuals. In addition, this influx has been noticeably beneficial to regulators and risk/compliance professionals, who have seen rising pay and new job opportunities.
In terms of importance and financial impact, chief compliance officers rank among chief financial officers (CFOs) and chief executive officers (CEOs) on some executive staffs, since a proper compliance environment keeps Uncle Sam at bay and represents a noticeable advantage over less-prepared competitors.
This is increasingly true in finance. According to the BLS, in 2019 (the most recent figures), the top-paying industries for compliance jobs included government, computer manufacturing, and pharmaceuticals.
- Compliance jobs are often in financial services, healthcare, and telecommunications.
- Compliance officers often need knowledge of ethical practices in their industries.
- Degrees in engineering, law, and chemistry, as well as economics, finance, and management, are often part of an education in compliance.
The compliance officer or manager positions are available in a myriad of industries, but job duties and responsibilities of individuals who hold a compliance officer position are similar.
The primary duty of any compliance officer is to ensure a company is being run legally and ethically, complying with all applicable industry regulations. This job duty begins with an in-depth analysis of current regulations and ethical standards in a particular industry.
Compliance officers must understand how to interpret these regulations and how they fit into the business operations of their companies.
A Base Understanding of Ethics and Standards
In addition to understanding legal regulations, compliance officers must also have a sound knowledge of ethical practices and standards in their industries. Although there are norms that constitute theoretical ethical behavior in most sectors, in practice, ethics are often left up to the interpretation of a compliance officer or manager.
The need for ethics interpretation makes it crucial for compliance officers to understand the underlying values of a company so that they can establish and implement standard procedures. An ongoing review of a company’s ethical standards is a necessary part of any compliance officer’s job.
The U.S. Bureau of Labor Statistics (BLS) projects the occupation will grow by 8% through 2024.
Compliance and Ethical Procedures
Compliance officers also share information regarding compliant behavior and ethical procedures with management, employees, and C-suite executives. In industries where regulatory burdens are high, compliance officers spend a substantial portion of their time developing, improving, and distributing compliance programs to company employees.
An Example of Compliance Officers at Work
For example, compliance officers in the financial services industry focus their attention on anti-money laundering initiatives, including ongoing training and education programs that detail how employees can remain compliant with overarching regulation.
Similarly, a compliance officer who is working at a health care facility may devote a substantial amount of time to creating and disseminating training programs that focus on disclosure and privacy laws for protecting the facility’s patients.
Compliance and Risk Management
Individuals who hold compliance officer positions are also responsible for reviewing the current and prospective risk a business enterprise faces. The information regarding business- or industry-specific risks is passed along to high-level executives to establish internal controls to minimize exposure.
A compliance officer must continually review the risks that face the organization along with the procedures that are in place to reduce that risk so that the company is well-positioned to manage it effectively.
Skills and Qualifications
Generally speaking, all compliance workers need analytical, investigative, and decision-making skills. For obvious reasons, it’s best if the officer has some experience working in whichever industry he intends to serve in a compliance capacity.
No two compliance officers face the same challenges, and the nature of the job is such that every officer becomes a perpetual student: Regulatory changes take place consistently. Degrees in engineering, law, and chemistry – along with economics, finance, and management – are great assets on a compliance resume. Those in the financial sector might need to carry securities licenses (more on that, below); professional certifications in a relevant field are also good choices.
$38,920 to $109,950
The salary range for Compliance Officer occupations, as of May 2019 (the most recent figure available as of September 2020).
According to BLS 2019 statistics, the latest available as of this writing, annual salaries for compliance professions range from $38,920 to $109,950, and hourly wages from $18.71 to $52.86. A lower-income earner in a compliance officer position is more likely to have minimal past work experience or hold a degree not directly related to the industry in which he works.
A worker with a higher income often has substantial tenure in his position or has earned advanced degrees in business, accounting, law, or finance. Of course, those who work at a large institution are more likely to have access to fringe benefits that increase the total compensation package, with chief compliance officers possessing those on a par with other C-Suite executives.
There are compliance jobs in almost every field, which can make it a difficult career path to prepare for. For example, a compliance officer working at HSBC or Wells Fargo has very different responsibilities and educational requirements than a compliance officer working for Dow Chemical or Exxon Mobil.
An aspiring compliance professional should identify those industries for which he has a passion or knack, and he should understand the practical and regulatory obstacles for those industries.
Certain industries, such as food, chemicals, health care, and finance, are lending themselves to compliance department growth. However, a majority of new jobs for compliance staff come from the public sector, not private business.
Public Sector Compliance Careers
According to the BLS, the top three employers of compliance officers are the federal government, state governments, and local governments. In fact, local governments (those with OES designations) employ more compliance officers (28,820 as of 2019) than private companies (19,360) albeit at lower pay.
Even though state and local public sector compliance jobs generally come with lower starting salaries than their private sector counterparts, benefits, and job security are far better. Even states with relatively low public benefits, such as Colorado and Minnesota, significantly outpace average benefits packages with the best private employers.
It’s also difficult to get fired from a public sector job, essentially adding a form of unemployment insurance. So, while applying for a public sector job can be cumbersome, it is still a good option for those interested in compliance.
What is Financial Compliance?
Before drilling down into how to become a financial firm’s compliance officer or a member of a compliance team, it is important first to understand what that job entails.
To be clear, the duties of compliance personnel vary by firm and job description; however, the following are tasks that are typically accomplished by compliance departments:
- Ensuring that the company adheres to minimum net capital rules.
- Making sure that employees are following internal compliance guidelines.
- Fielding and addressing customer complaints.
- Maintaining a dialogue with regulatory bodies.
- Reviewing sales activities and discretionary accounts and making certain that other principals within the firm are obeying securities laws.
- Making sure that the firm complies with state securities laws.
- Ensuring that all employees are property-registered and have taken continuing education classes as required.
- Making sure that the company complies with regard to all trading and market-making rules.
- Representing the firm or preparing documentation for arbitration cases that may be pending.
Financial Industry Compliance Careers
As mentioned above, the financial industry is a ripe field for those interested in a compliance-related career. The compliance department of a bank, brokerage or investment management firm works to ensure that all of the employees and officers comply not only with Securities and Exchange Commission (SEC) regulations but also Financial Industry Regulatory Authority (FINRA) rules.
A position as a compliance officer or manager is not typically deemed as entry-level employment. Bachelor’s degrees are usually a minimum requirement, and some employers may look for advanced degrees, like a law degree or a master’s degree in business administration (MBA), especially to qualify for a higher-level position.
Compliance officers in other sectors have the opportunity to complete the Certified Compliance and Ethics Professional Program (CCEP) through the Society of Corporate Compliance and Ethics (SCCE).
The CCEP requires participation in an intensive prerequisite course along with the successful passing of an exam. Similar designation and certification courses are available through the Ethics and Compliance Officer Association (ECOA).
In the 1980s, a four-year bachelor’s degree was less frequently required to get work in a compliance department. A good number of people back then merely had high school diplomas, and even if they did graduate from college, it often wasn’t with a finance degree. At that time, the idea was that employees would learn on the job.
All of that has changed. A degree in finance, management, accounting, economics, or law is a must if you would like to get hired at any one of the bulge bracket firms. Additionally, although it’s not mandatory, a master’s degree in finance, accounting, or economics can help to set an individual apart from the countless other candidates that have bachelor’s degrees.
The Bonus of a Law Degree
Finally, those with a law degree often have a leg up on the competition as they already have a feel for the way the law works, which often makes them top candidates for many brokerage houses.
Through the National Regulatory Services Office (NRS), individuals seeking advancement in careers as compliance officers within the financial services and investment industry can complete the Investment Adviser Certified Compliance Professional credential.
This advanced certification program provides participants with up-to-date regulatory content that is relevant to financial experts working in compliance departments.
What About Securities Licenses?
A firm may require its compliance personnel to become licensed. It is common for firms to require their compliance personnel to sit for the Series 7 and Series 63 exams. The curriculum for these licensing exams allows compliance officers to obtain a good foundation and understanding of the securities industry.
Other licenses that a firm may sponsor a compliance individual for include the Series 14, Series 26, Series 27, and Series 39 exams. These exams require an understanding of net capital rules, Municipal Securities Rulemaking Board (MSRB) rules, rules for maintaining customer accounts, sales (and other) supervisory roles and record-keeping.
Compliance teams will occasionally hire those who have worked in other fields or aspects of the industry, such as (brokerage) sales and trading. However, a large number of those who work their way up the compliance ranks seem to have extensive back office experience in trade settlement or operations.
A fair number of those in the field also have a background in accounting or have worked for the major stock exchanges or FINRA as field auditors or examiners.
Beyond that, many companies will also look to see whether the candidate has had prior experience at a firm of similar size and stature. This experience ensures that the individual will be able to handle the type of duties and often frantic pace characteristic of the compliance department.
The nature of the work of a compliance officer at a large firm or warehouse is often much more involved than those of a compliance officer at a smaller, regional firm.
Even if an individual meets all of the above requirements and looks good on paper, there are specific skill sets that they must also have to be successful in the field of compliance. For example:
- Individuals should be detail-oriented and have the ability to review and analyze large data sets in short order.
- Since compliance personnel members are charged with making sure that the company adheres to all FINRA rules, they must be able to decipher information (such as detailed trade activity) and be able to determine whether the individual and/or firm is in compliance.
- Compliance personnel must have intimate knowledge of other jobs and functions, such as sales and trading (and the rules associated with them).
The Bottom Line
All individuals in compliance should be beyond reproach. That is, to do this job correctly they must maintain a high level of integrity and serve as an example for other employees of the company.