Compliance Training 101 Michele Lipschultz, MBA Manager, GCO/Enterprise L&D Thrivent Financial Pam Ziermann, CSCP Senior Vice President Compliance Dougherty Financial Group LLC Michelle Canela, MSL, CSCP Sr. Compliance Manager INTECH Investment Management LLC

AGENDA Getting Management Engaged Training On A Budget Time to Develop Training??? Who Are We Training Required Training & Other Topics

How Do We Get Them ONBOARD? Influence The Right Negotiation Skills Target What They Value

Influence Build the Bridge-Rapport ‐ Know Your Audience ‐ How to…Without Authority or a Big Stick Understand the Business Align your Goals with the Corporate Goals

Principled Negotiation ~Change the game~ Negotiate on the Merits Principled Negotiation Participants : problem- solvers. Goal: wise outcome- efficient & amicable. Separate the people, from the problem. Soft-people, hard-problem. Proceed independent of trust. Focus on interests, not positions. Explore interests. Avoid-a bottom line. Options-mutual gain. Develop multiple options: decide later. Use OBJECTIVE criteria Reach result based on standards independent of will. Reason-be open to reason; yield to principle, not pressure.

Perception One of the most important negotiation skills you can possess: The ability to see the issue as the other side sees the issue.

Principled Negotiation ~Change the game~ Negotiate on the Merits Principled Negotiation Participants : problem- solvers. Goal: wise outcome-efficient & amicable. Separate the people, from the problem. Soft-people, hard-problem. Proceed independent of trust. Focus on interests, not positions. Explore interests. Avoid-a bottom line. Options-mutual gain. Develop multiple options: decide later. Use OBJECTIVE criteria Reach result based on standards independent of will. Reason-be open to reason; yield to principle, not pressure.

WIFY- Target Their Values They Value? Mitigate Risk –Build/Buy Training to Increase Awareness, Change Attitudes & Behaviors Impact-Measurement –Share & Show the Impact –Heightens the Validity (One spoke in the Wheel)

Manage Relationship Value Reach…Building Equity Before You Need It Anticipate questions and barriers Ask for help Let the other person think it was their idea Don’t seek immediate buy-in

Utilizing Assessments-Training Focus & Portfolio Annual Plan: Training Requirements Leverage Assessments –3012 –206 (4) a –38(a) 1 –Business Risk Management/Risk Group –Exam Priority/Annual Focus –Deficiency Letters –Complaint Trends & Patterns

Training On A Budget PowerPoint Equals Wonders Movie Maker Transitions for flow and efficiency Graphics-Free or Cheap Snag-It Audio-Internal/Talent Free Audio Tool Survey Monkey

Training On A Budget Adult Learner Methodology –Learning Styles ACTIVE-Crave Interaction Practical Application –Muscle Memory Break Training-3rds Leaders As Teachers –Credibility, Engagement, Adoption

eCards-Awareness / Curiosity

Exam Gone Wrong- ACM Training

Gamification Training doesn’t have to be a chore Gamify your training: –Gamify poorly and it can actually make the training experience worse. –Choose your Game Elements 1 wisely to keep employees engaged. 1. Source:

Who Has Time to Develop Training?

Use information provided by regulators sample Bond Basics I.Bond Basics – SIFMA.url II.Smart Bond Investing- - Bond Basics – FINRA.url III.Smart Bond Investing- - Glossary - FINRA.url IV.Smart Bond Investing- - Types of Bonds – FINRA.url V.What You Should Know- - Bond and Bond Funds – SIFMA.url. Deferred Annuities I.Variable Annuities- - Beyond the Hard Sell – FINRA.url Mutual Funds I.Mutual Funds – FINRA.url II.Net Asset Value Transfers- -Look Before You Leap Into another Mutual Fund – FINRA.url III.Understanding Mutual Fund Classes – FINRA.url

Tracking Example Start Date: User ID Date Rep 18/22/2014 Rep 28/22/2014 7/30/2014 End Date: Filename S ystemic Investment Plans- - Educate Yourself Before You Enlist – FINRA Investor Alert.url Smart Bond Investing- -Bond Funds – FINRA.url 8/29/2014

Use information provided by regulators Use SEC National Exam Program Risk Alerts and other SEC Press Releases as guides.SEC Press Releases Start with the top 20 risks from your 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?

When you don’t have a training department Compliance training sessions/opportunities: –Specified periods of time/One hour timeframes. –Consider multiple quick sessions throughout the year.

When you don’t have a training department “Fill-in-the-blank” Awareness Month Newsletter Approach -Send short s covering various compliance training topics or to reinforce training sessions that have already been completed. Free Newsletter templates

Working with HR Compliance training….BEGIN the moment an employee steps in the door. COLLABORATE with Human Resources to ensure Compliance is included in the employees’ onboarding/orientation process.

Working with HR Educate HR of issues that should be communicated to Compliance if they occur. Examples include: –Employee voices grievance of having informed a supervisor of materially incorrect performance having been sent to a client and revised information was not sent. –An employee disseminates material information before it has been publically disseminated. –Employee has FINRA licenses that need to be “re- housed.”

Rules vs. Reality Essentially, all employees at every level should receive compliance training. For example, some topics are more global-centric. All employees should be familiarized and reminded of: –Code of Ethics, Personal Trading Policies, Political Contributions, Social Media, etc. –Specific to the employees’ roles; such as, gift and entertainment preclearance for client-facing employees, or marketing compliance review processes for marketing/advertising employees.

Rules vs. Reality However, not all employees need to be trained on all rules. ??? not who to train, but what to train the employee on and how to go about it.

WHO?

Portfolio Managers Related training topics for Portfolio Managers (“PM”) will depend on the risks they expose the firm to or are themselves exposed to: General Code of Ethics training. Material non-public information – receipt and dissemination of MNPI. Personal trading - preclearance, bans, windows, duplicate statements. Receipt of gifts and/or entertainment – Dollar limitations, appropriateness, sporting events, etc.

Customer/Client-Facing In addition to the global–centric training, the provided to Customer Facing employees compliance training will generally include: Data Protection/Data Privacy Customer/Client Identification Procedures (to mitigate fraud) Error Correction Reporting and Error Escalation Procedures Holdings Disclosure Policy Compliance Review process for Marketing Materials

Customer/Client-Facing Considerations for training Client-Facing Employees: Participate in regularly scheduled calls or meetings. Send periodic s covering a compliance topic related to their role. Acknowledge dedication to the Compliance Culture.

Required Training Topics & Topic Ideas

Required Training/Topic Examples BDIA/PF AMLCode of Ethics Annual CertificationRed Flags Annual Compliance Meeting Firm Element Procedures Red Flags Supervisory Element Hot Topics

Compliance Training Can be relevant Can be engaging Can impact the business/move the needle Can be a Risk Mitigation tool Can be –Yes, we know Compliance and FUN sounds like an oxymoron-we’re negating the MYTH

Compliance Training- Engagement & Impact Questions?

Appendix

Gamification 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 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 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 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.Corporate Compliance and Singing PrisonersCompliance Babies

Gamification 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.