Does CCO Outsourcing Make Sense for Your RIA?

Starting a registered investment advisor (RIA) firm or growing an existing one means having a chief compliance officer (CCO) on board to ensure that your business satisfies regulatory requirements. The question is, should you hire in-house or outsource the role to a third-party? According to Schwab’s 2025 RIA Benchmarking Study, 83% of advisors outsource compliance activities so they can concentrate on deepening client relationships.¹ Weighing the benefits of an outsourced CCO can help you decide if it makes sense for your firm.

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Understanding the Role of the RIA Outsourced CCO

An RIA outsourced CCO handles compliance requirements for advisory firms, but they’re not part of the in-house team. Instead, an outsourced CCO is an individual or third-party company that handles compliance duties for your firm externally. Here’s what an outsourced CCO is typically responsible for:

1. Compliance Program Creation and Implementation

SEC rules require registered investment advisors (RIAs) to have a written compliance policy. This policy must be established to prevent compliance violations, ensure that investment advisor representatives (IARs) adhere to their fiduciary duties, and protect client assets. If you don’t have a compliance policy in place yet, an outsourced CCO can help you create and implement one.

2. Ongoing Compliance Monitoring

Outsourced CCOs can help to ensure that your firm is in full compliance with all relevant regulatory requirements, from the federal level down. Some of the ways they may do that include running scenarios to stress test your compliance policies and systems and monitoring employee trade activity for potential violations.

3. Annual Reviews

RIAs are required to complete an annual compliance meeting following Rule 206(4)-7 of the Investment Advisers Act. This review is intended to ensure that your firm’s compliance policies and procedures are sufficient to detect, prevent and correct potential violations of federal regulations. Your CCO can oversee this process and ensure that it runs smoothly.

4. Risk Evaluation

A key aspect of developing an effective compliance policy is risk identification. Both internal and external risk factors can threaten your firm’s compliance status. An outsourced RIA CCO can identify risks that need to be addressed and offer solutions on how to mitigate them.

5. Form ADV Filing and Updates

RIAs must complete a Form ADV to register with the SEC. This document includes key details about your advisory firm’s operations, fees, services, leadership and client base. Regular Form ADV updates are required annually. Your CCO can help you navigate these processes and complete the necessary paperwork to ensure your updates are filed accurately and on time.

6. Audit Preparation

The SEC conducts routine compliance audits of RIAs every three to five years. A for-cause inspection may be triggered at any time if regulators believe there’s a reason to audit your firm. An audit can be a stressful event, whether it’s anticipated or a surprise. An outsourced CCO can help you conduct a mock audit so you’re fully prepared when it’s time for the real thing.

7. Compliance Training

Your employees should be just as well-versed in your firm’s compliance policies and code of ethics as you are. Training employees and educating them on specific compliance or ethics issues is another key task for outsourced CCOs.

8. Reporting

While you may be leaving compliance tasks to an outsourced CCO, you still want to know what’s going on behind the scenes. Your CCO can draft compliance reports or updates for you. They can also submit required reports to the SEC. For example, if your firm experiences a data breach, the SEC’s cybersecurity rule requires you to report it promptly.

9. Other Duties

A reputable outsourcing company can also act in a consulting capacity to answer any questions you have about compliance requirements or potential violations. Your CCO should also be up-to-date on emerging compliance trends to keep your firm ahead of the curve.

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Benefits of Working With an RIA Outsourced CCO

Outsourcing compliance duties to an individual or a compliance firm has advantages for large and small RIAs alike. Here are some of the reasons advisors choose this option.

1. Cost

Working with an outsourcing company can be less expensive than hiring a CCO to work in-house on a full-time or part-time basis. Rather than paying a salary and benefits, you would pay a flat monthly fee that’s determined by your firm’s assets under management (AUM) and the scope of services required.

2. Time Savings

Handing off compliance duties to an outsourced CCO means you no longer have to wear that hat. This allows you to dedicate more of each day to attracting new client assets, marketing your firm and meeting the needs of the clients you already have.

3. Expertise

Outsourced CCOs are professionals who possess the experience and expertise necessary to manage your firm’s compliance profile. You don’t have to second-guess their recommendations or guidance if you’re working with a trusted provider. You may prefer to have a trusted individual whose expertise you can rely on, especially if navigating federal and state compliance rules feels confusing or intimidating.

4. Adaptability

An outsourced CCO can meet you where you are, and grow with you as you expand your client base. Your provider can monitor compliance trends and a shifting regulatory landscape. They can also help you identify preemptive measures your firm may need to take.

Is outsourcing CCO duties appropriate for every RIA? No. It may make sense for some firms to have an in-house compliance officer on the premises at all times. There are also some potential downsides associated with outsourcing that must be weighed.

For example, you may have concerns about an outsourced CCO being too hands-on or not hands-on enough in managing your firm’s compliance. Or you may find that a CCO provider is a mismatch if they insist on doing things “their way” without taking your firm’s needs, goals or preferences into account.

How to Choose an RIA Outsourced CCO Provider

Research is required to find the right company or provider to work with. Here are some helpful questions to ask as you vet different platforms:

• Is there a typical type of RIA you work with? For example, do you cater to smaller, boutique firms or do you primarily work with larger RIAs?
• What is the full scope of compliance services you offer? Are your services prepackaged, or do you have à la carte options?
• Will you work with me to create a compliance service plan that’s tailored to my firm’s needs and clientele?
• How will we communicate, and how often will we be in touch? Will I have a single point of contact, or will I communicate with a team?
• What type of experience does your team have?
• What kind of technology capabilities do you offer?
• How long does the onboarding process take? Will my team be required to complete any training or attend an orientation before we can begin working together?
• What do you charge for your services, and how is your pricing structured?
• Do you require a service contract and, if so, is there a minimum term?

Talking to other advisors in your network who outsource compliance services can help you gain perspective on which providers have a solid reputation. You can also use sites like the Better Business Bureau (BBB) or Trustpilot to check for any complaints or negative reviews involving a particular company.

Frequently Asked Questions

Bottom Line

Outsourcing the CCO role for your RIA could be a good option if you’d like to hand this function off to someone else. It’s a good idea to carefully vet any CCO outsourcing provider you’re thinking of working with. Before you commit to any one company, take the time to have an in-depth conversation about what your firm needs most.

Tips for Growing Your Advisory Business

• Digital marketing is only one way to bring in new potential clients. SmartAsset AMP (Advisor Marketing Platform) is a holistic marketing service financial advisors can use for client lead generation and automated marketing. Sign up for a free demo to explore how SmartAsset AMP can help you expand your practice’s marketing operation. Get started today.
• Compliance software for RIAs can help you manage key tasks if you’ve assumed the CCO role, at least for the time being. When comparing compliance software options, consider the range of features, the level of support provided and the cost. Also, consider how easily a new compliance software program will integrate into your existing tech stack.

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