It’s an evolution that has taken the better part of a decade: after years of bickering and complaining about the “nuisance” that is compliance, financial advisors are now seeing their firms’ compliance departments as partners.

For years, advisors surveyed for the Report Card series cited compliance as a cost center and a “necessary evil” to keep business on track and advisors out of regulatory trouble. However, attitudes have since changed. The shift was first apparent in last year’s Report Cards, as the majority of advisors stopped complaining about compliance officers’ “nitpicking” and began to commend them for their advice and guidance in regulatory matters.

The thawing relations between advisors and compliance was even more evident this year, as advisors surveyed across all distribution channels gave higher ratings to their relationships with their firms’ compliance departments.

Across this year’s Report Card series, the advisor’s relationship with the compliance department category received an average performance score of 9.0, second only to firm’s ethics, and also received an importance rating of 9.1. Both ratings are minor improvements over an already strong 2008, when advisors rated their relationship with their firms’ compliance departments at 8.9 in performance and 9.0 in importance.

A major reason why advisors see compliance in a more favourable light is because the compliance departments themselves have redefined their roles within companies, says Ben Eggers, vice president and head of wealth-management compliance with Toronto-based TD Canada Trust. A key part of achieving that is to have a positive mission statement, and Eggers says that when he joined TD several years ago, one of his top priorities was redefining the compliance department’s mission statement.

“We rewrote it to become a one-liner that says, ‘We want to be an effective and efficient enterprise-wide partner, which enables TD to achieve its goals in a compliant manner’,” he says. “The key words there are ‘partner’ and ‘enables’; we don’t want advisors to see us as a roadblock to doing business.”

The compliance department’s new approach has changed the way the various departments across the bank interact with compliance, Eggers says: “Working groups and committees have let us into the tent. Because we are a partner, we sit in on those groups during product launches, which lets us address any regulatory potholes beforehand.”

(The proof of how far TD’s compliance department has come in developing proactive relationships with its advisors can be seen in the 9.2 performance rating the firm’s advisors gave their relationship with compliance in the 2009 Report Card on Banks and Credit Unions, tops among all firms in that survey.)

The shift that now sees compliance officers sitting in on working groups signifies how far that relationship has come from its earlier, darker days, says Sandra Kegie, executive director of Toronto-based Association of Canadian Compliance Professionals: “Firms have realized they can, in fact, work with chief compliance officers.”

Much like Eggers, Kegie says that the improved relationship between the compliance department and advisors is a direct reflection of how compliance officers have redefined their role within the financial services industry.

When Kegie’s career in the industry began in 1998, the average compliance officer often focused on telling advisors what to do, she says, which led to an adversarial relationship: “Back then, the attitude of other people toward [compliance officers] was normally on the negative side. It was an uphill battle with everyone. Compliance people then learned to pick out the positive elements in their jobs, such as education, and to focus on those.”

As the years went by, the focus on compliance officers’ role as educators has helped them feel like a more integral part of their organizations, Kegie says. In turn, that has had a positive impact on the attitudes of advisors and management: “[Compliance] officers have been preaching, ‘I am here to help you keep your business — and you — out of trouble. If you have a question, if you are unsure about something, if you want do something, call me first.’ And so, a lot of people [now] are.”

Advisors across the board can attest to that. An advisor in Alberta with Toronto-based boutique brokerage GMP Private Client LP says compliance is there to “guide” advisors.

An advisor in British Columbia with Winnipeg-based boutique brokerage Wellington West Capital Inc. happily conveyed the admiration the firm’s advisors now have for their compliance department: “We love compliance. They are here to support us. We use them as a tool — that’s how it should be.”

@page_break@To be the educators that compliance officers need to be nowadays, it’s no longer enough for them to be able to understand and explain the rules, Eggers says: “Compliance professionals need to understand the products as well [or] else they are limited in what they can do. They need to understand the business — what trading is and how it works — in order to do their jobs well.”

But no matter how hard compliance officers work toward developing strong relationships with advi-sors, there are still some for whom the perception of compliance has not changed. As one advisor in B.C. with Montreal-based bank-owned brokerage National Bank Financial Ltd., puts it: “The rules and regulations are ridiculous. They are all paperwork. If they want to protect the client, [they should] drop the paperwork. It’s unnecessary.”

An advisor in Saskatchewan with Regina-based mutual fund dealer Partners in Planning Financial Services Ltd. sings a similar tune: “They get carried away with disclosures, and the paperwork doesn’t make anything better.”

Although compliance can sometimes be onerous, with mountains of paperwork involved, good advisors will co-operate regardless of what’s required of them, says Michael Sharpe, chief compliance officer with Toronto-based boutique brokerage Richardson Partners Financial Ltd.: “Good advisors have always embraced compliance.”

IE