1. Compliance Training Beyond the Basics 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

2. 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

3. 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?

4. 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

6. 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 3 rd parties Share the WHY… with the WIFY

7. 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?

8. Tips & Tricks Share/Teach-back Your Ideas- Effective & Relevant Training

9. Internal vs. Vendor Creation

10. 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

11. 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

12. Training Fun and Effective Gerontologist videoThe Bully-Id Theft/AML

14. 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

15. Gamification

16. Interactive Training Activity Create-Interactive Training Program

17. 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.

18. 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

19. Develop a Plan and Library Save your training! FINRA Continuing Education Assessment –New Products –New Branches –New Rules –Complaints

20. Sample Training Library HANDOUTPROVIDED

21. Training Approaches & Training Metric How-To’s

22. 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 freshHANDOUTPROVIDED

23. Training Metrics-How To How Do You Measure? How Do You Quantify the Impact?

24. Objectives Know Your Training Objective(s) handoutKirkpatrick Four Levels - handout Utilize course tests and evaluations –Knowledge Transfer Behavior, Attitude and Skill Set

25. 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

26. Fraternity Benefit Society (FBS) How Training Impacts Business

27. Compliance Training Beyond the Basics Questions?

28. Appendix

29. Interactive Training Activity – Activity/Interaction Handout Questions 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.

30. Training Approaches - Handout Team Agreement Example We agree to: Uphold the values of the mission statement. “When in doubt, ask Compliance.”

31. Training Approaches - Handout Group/Interactive Sessions Small team interaction and learning Practical application of the subject Peer reinforcement

32. Training Approaches - Handout Quizzes Individual Tests Group Tests –Collegial, foster interaction Tests how effective the instruction has been. –Areas of missed communications surface Can testing replace training?

33. Training Approaches - Handout Videos – 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

34. Training Approaches - Handout Computer-based, multimedia Bad live training is as bad as bad computer training. AdvantagesDisadvantages Provable Less opportunity for questions Consistent messaging to audience No personal interaction Reaches everyone Inability to have live instructor to detect problems

35. Training Approaches - Handout Just 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.

36. Training Approaches - Handout Follow-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!”

37. 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

38. 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

39. 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.

40. 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.

41. 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.Corporate Compliance and Singing PrisonersCompliance Babies

42. 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.

43. Evaluation - Handout