Your firm does. Once you register as an investment adviser, Advisers Act Rule 206(4)-7 requires written policies, an annual review, and one named chief compliance officer listed on Form ADV. You can hold that title yourself, hire an employee, outsource it to a fractional CCO, or buy software and keep a consultant on retainer. The work can be delegated. The liability stays with the firm.
Understand the legal and operating mechanics before you turn a private concern into a public move.
- The compliance rule (Advisers Act Rule 206(4)-7) requires written policies, an annual review, and a designated chief compliance officer. State rules follow the same shape.
- The CCO is a named natural person, not a department or a vendor entity, and that name sits on Form ADV Part 1 where an examiner reads it first.
- An outsourced CCO is normally made a supervised person or officer of your firm by contract, which is what makes the designation valid.
What does a chief compliance officer actually do?
The compliance rule requires a registered adviser to adopt written policies and procedures reasonably designed to prevent violations of the Advisers Act, review them at least annually for adequacy and effectiveness, and designate one individual as the chief compliance officer responsible for administering them. The SEC's adopting release described the person it had in mind: competent and knowledgeable regarding the Act, and given full responsibility and authority to develop and enforce policy. Both halves matter.
What are my four options for staffing the CCO role?
Four honest models: you as owner-CCO, an employee CCO, an outsourced or fractional CCO, or a consultant-plus-software hybrid where you keep the title. Most firms cycle through two of them in the first few years.
What can I never hand to somebody else?
Three things stay with you regardless of model, and the first is the only one that shows up in an enforcement caption: the firm's liability. The registrant is the adviser entity, and the fiduciary duty runs from your firm to your client. Your vendor contract runs between you and your vendor, and neither the client nor the regulator is a party to it. Read the limitation-of-liability clause and you will usually find damages capped at fees paid,
What lands on the compliance calendar every year?
The recurring obligations are finite, boring, and testable from documents, which is why examiners start there. Six things drive the calendar for a small RIA.
The word "designate" is doing real work. A firm cannot name a consulting company as its CCO. It names a human, and under the Act that human has to be a supervised person of the adviser, which is why credible outsourced arrangements appoint the outside CCO as an officer of your firm in the engagement agreement. A provider unwilling to be named at Item 1.J of your Form ADV Part 1 is selling you consulting, not the role. That field is public;