Two big compliance services firms for advisers merge

Two major compliance services for advisers announced a merger Tuesday, citing increased demand among investment advisers and brokers for compliance help.

National Compliance Services Inc. and Regulatory Compliance say their product lines complement one another and will offer advisers one-stop shopping as more advisers become independent and regulations proliferate.

“This positions us to offer the broadest set of compliance solutions and the deepest bench strength of expertise of any single provider,” Regulatory Compliance chief executive Stephan Sussman said in a statement.

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Both companies are privately held and have been in business for more than 20 years. NCS specializes in compliance consulting for registered investment advisers and broker-dealers, providing registration services and technological support. In addition to registration help, Regulatory Compliance supports financial operations and can be an outsourced chief compliance officer.

Many small to medium-size advisory firms face SEC and state mandates to have chief compliance officers, and filling that role can require one person to perform several duties. Rita Dew, NCS president and chief executive, said the combined firm can help advisers with these duties, or advisers could do a complete outsourcing of those functions to the firm.

The merger of the firms will reduce competition in the compliance-consulting market but not necessarily raise costs, Ms. Dew said.

“If anything, we think it might lower prices,” she said. The merger “gives us greater expertise and more people to be more flexible in our pricing model.”

No decision has been made on the headquarters for the merged firm. NCS will continue to operate from its Delray Beach, Fla., headquarters, while Regulatory Compliance will have offices in New York, Boston and southern New Hampshire. The new company will have five offices nationwide, and Mr. Sussman and Ms. Dew will serve as co-chief executives.

(More: Managing the convergence of compliance and technology)

The companies declined to provide financial details about the merger, which became effective Sept. 16. But they promised they would expand their services.

Mr. Sussman said they anticipate more consolidation in the industry, and plan to “design and deliver support we know clients will value, including tax services, cyber-assessments and legal support.”