What is an Outsourced Chief Compliance Officer in the context of a Registered Investment Advisor (“RIA”)?

Definition: All RIAs are required to have a named Chief Compliance Officer (“CCO”.) One approach to fulfilling the responsibilities of the CCO role is to utilize a third party compliance vendor that provides an Outsourced Chief Compliance Officer offering. In this arrangement, a compliance expert at the vendor takes on the formal title and responsibilities of the RIA’s CCO role, but typically does not become a W2 employee of the RIA.

When used in an RIA context: “The RIA chose to utilize an Outsourced Chief Compliance Officer solution provider to fulfill their CCO responsibilities.”

See also: Episode 58, Chief Compliance Officer, CCO, Vendors (compliance)