I was on the road last week, so I didn’t get my latest Morningstar Advisor column added to Bits and Bytes for October 14.
In this month’s column, I conducted my first hardware review of a Fujitsu ScanSnap S1100 portable scanner. For advisors seeking a mobile document capture solution, I think the S1100 offers a compelling package. Check it out.
Click here to read Capture Documents While on the Road (at MorningstarAdvisor.com).
Last week I posted How to address compliance deficiencies with technology: Part 1, covering the first half of “Best Practices” provided by the North American Securities Administrators Association (NASAA) for investment advisers. NASAA’s full statement appears in Coordinated State Exams Identify Top Investment Adviser Deficiencies at nasaa.org.
Read Part 1 first, then continue with Part 2 below to see my thoughts on how to address each practice with technology.
Solution: Document management software, Workflow, Email Newsletter Service, Document Valut
Imagine that, something so simple as delivering a privacy policy resulting in not one, but four technology solutions! You’re required to give new clients your privacy policy and deliver one to all clients annually. First, where do you keep the original copy of your privacy policy? A good place to keep it is in document management software. Not only can the software help you locate your current privacy policy, it also should maintain a history of previous versions of your policy should you ever need to review changes.
With respect to the steps you follow for new clients, workflow can eliminate the times you might forget to deliver the required document. Workflow for the new client process should define all the steps needed to bring on the client, including the delivery of your privacy policy. You’ll find workflow tools in some CRMs, document management software, or specific workflow applications.
Physical (or virtual) delivery of your privacy policy is fairly straightforward. For clients who elect to receive your privacy policy electronically, you can deliver your document via email or by uploading it to a client document vault. You can lighten the load of email delivery by using email newsletter services, allowing you to create just one email with custom mail merge fields for client names that includes your privacy policy as an attachment. A few, but not many, client document vaults allow you to upload your privacy policy once and then copy it to all of your clients’ folders.
For those clients who do not want electronic delivery, I suppose you’ll just have to print hard copies and send them the old fashioned way by mail.
Solution: Accounting software, Document management software, Compliance calendar
This best practice is straightforward, but enough advisers fail to do this NASAA feels compelled to address it. First of all, you likely already generate company financials out of your accounting and bookkeeping software (Quickbooks in most cases). When you generate your reports, why not file them to document management software in their own repository? That way you’ll have a secure, backed up location where financials are kept, spanning all the years you’ve been in business.
Add to that a compliance calendar system so that your Chief Compliance Officer receives gentle reminders regarding due dates for the submission of your financials. Compliance11 is one example of such calendar systems you can use to keep tabs on things (covered in Morningstar Advisor).
Solution: Document management software, Compliance calendar
There’s not a lot of technology needed to follow this best practice, but once you purchase your surety bond (when required), scan and file a copy of it into your document management software. You can also set a reminder in your compliance calendar to renew the bond when it reaches its due date.
Solution: Portfolio accounting software, Custodian Accounting software
Calculating fees can be a simple or convoluted process for an advisory firm. Some firms charge a flat percentage of AUM with no breakpoints or discounts. Just value the client’s portfolio once a quarter, multiply by the fee percentage, send a fee debit request to the custodian, and copy the client with an invoice.
But for those who provide asset breakpoints, exclude certain investments from fee calculations, or aggregate households together to qualify for reduced fees, things get complicated. The lesson here is to leverage high-quality portfolio accounting software that can be programmed with your specific fee structure and be customized for the special discounts you offer. I’ve seen complicated fee structures implemented with Excel spreadsheets, but these are so fragile and susceptible to innocent errors that can result in embarrassing calls when the wrong fees are calculated.
In addition, a few of the portfolio accounting systems will also reconcile fee distributions received from custodians and cross-reference them with the original debits requested. Doing this manually is extremely time consuming, so adding automation wherever possible is desired.
Solution: Diligence, Compliance calendar
No technology solution can solve all your compliance requirements. Here, just ensure that any material you publish publicly featuring your firm and/or its investment performance is accurate and complies with reporting requirements.
Solution: Account aggregation services
You have custody of client assets when you have the ability to direct fund distributions or change an account’s address of record without requiring client approval. Not many advisers have custody, but some unknowingly do when they ask clients for their login and password to a held-away account like a 401(k) or 529 plan. Login credentials are typically used to access holding and transaction information in the accounts to provide performance reporting and comprehensive net worth reports for clients.
Instead, you should use account aggregation services to obtain balance, holding, and transaction information from held-away accounts without needed any knowledge of client login credentials. Keep those credentials out of your hands. Account aggregation delivers daily information on held-away accounts to most popular portfolio accounting systems. You can still report on those held-away assets, but you don’t need to tiptoe the line of custody by gathering clients’ login credentials.
Solution: Diligence, Compliance calendar
Again, there really isn’t a technology solution that can facilitate this best practice, but should an adviser engage with solicitors, one must have procedures in place to follow regulatory requirements.
I hope you took a few pointers away from this two-part series. If you have alternate approaches to tackling compliance with technology, feel free to share them below or email me privately if your compliance department prohibits public posting!
Today I’m giving my latest presentation on using the iPad in business at CabinetNG Collaborate 2011. Another version of this talk also adds ways financial advisers and wealth managers can use the iPad in their practices. I’ll be unveiling that one at NAPFA’s Practice Management & Investments 2011 conference in two weeks. All the details are on my speaking page.
As I wrote in prior weeks, we’ve had the calm before the storm of technology news for financial advisers. Fidelity broke the ice with announcements I highlighted in Bits and Bytes for September 30. This week, RIABiz unloaded two good articles, making up for the recent absence of news.
Now on to this week’s stories of interest:
Once good for a few million, TD Ameritrade’s foot-in-the-door strategy is starting to net billions from RIABiz.com
[Dominant custodians Schwab and Fidelity have a sizable lead in assets over TD Ameritrade, but the RIA-friendly custodian is consistently closing the gap.] Ever upwardly mobile, TD Ameritrade Institutional has courted – and won – some high-octane RIAs this year as well as capturing an increased share of the prized breakaway advisor segment.
Long a tech innard for Schwab, LPL and TD, Advisor Software is looking to push its own brand with new product from RIABiz.com
[Tech innard? How about tech core instead. Goalgami actually started as a consumer product marketed as a personal balance sheet solution. Now the Pro edition by Advisor Software leverages the tool’s unique features for advisers.] After years of offering its rebalancing software under the private labels of big-name firms, Advisor Software is launching a new planning product and selling it directly to advisors.
Tamarac Named to 2011 Microsoft Dynamics President’s Club at Tamaracinc.com
[It’s one thing to customize a generic CRM like Microsoft Dynamics, but it’s far more important to demonstrate one’s support and commitment to customer service to ensure users’ success on the platform. Tamarac appears to be doing both exceptionally well.] Tamarac, Inc., a leading provider of integrated portfolio and customer management software for financial advisors and wealth managers, has been named to the 2011 Microsoft Dynamics President’s Club for its Advisor CRM solution.
Last week the North American Securities Administrators Association (NASAA) released a statement addressing compliance deficiencies examiners frequently encounter when reviewing investment advisers. For the details of NASAA’s statement, click here to read Coordinated State Exams Identify Top Investment Adviser Deficiencies at nasaa.org.
In addition to citing the top five categories with the greatest number of deficiencies, NASAA recommended a “Best Practices” guide to assist advisers when developing compliance procedures. In today’s post, I’m going to review the first half of NASAA’s Best Practices and share my ideas how each can be addressed through the use of appropriate technology.
My aim is to identify tools, processes, and techniques designed to improve your advisory firm’s compliance practices as well as lower your direct expenses of following regulatory requirements (i.e. increase your profits). Note that not all of the Best Practices are below, since items like “Review and update all contracts” are fairly self-explanatory.
Let’s begin.
Solution: Document Management Software
If your firm has been examined recently, you’re familiar with the lengthy list of documents requested by examiners. They want records ranging from your company’s org chart all the way to your trade blotter for one or two years. While the specific documents requested can vary widely from firm to firm, you need an efficient system that enables you to store, search, and retrieve records. Without question, document management software is the best solution. Don’t only use it for client documents. As NASAA’s best practices say, you need to deliver financial records, too. So when you close your company’s financial books for the year, add in the final records to a company repository in your document management software. Doing so stores it for your later review, but also allows for easy retrieval (by those who have appropriate access rights, e.g. your CCO) during an exam.
Solution: IaaS, hosted servers, or online backup
This is not the first time you’ve heard this: you’re an adviser, not an IT person. So why do you continue to switch backup tapes on your server as a part of your morning routine? It’s time to adopt more progressive, cost-effective, and automated solutions to back up and protect your data. If you’re tired of managing your own infrastructure altogether, consider leveraging Infrastructure-as-a-Service (IaaS) platforms where you can “rent” servers, install your custom financial planning or portfolio software, and operate as if the server was located in your office. Services from Rackspace, Amazon, IBM and more give you this flexibility. There are also providers that cater specifically to the needs of advisers like you, including True North Networks that I featured in this Morningstar Advisor column.
If you’re not comfortable with moving your entire infrastructure off-site, then online backup solutions may be a compelling alternative. You can still maintain your servers in-house, but you can back up critical data to online providers. Carbonite, Egnyte, Mozy, and CrashPlan are just a handful of the many providers that support online backup.
But a word of caution: even if you successfully back up all your data to an online solution, you’re not backing up your applications installed on your server. Realistically, you need some kind of mirroring or imaging solution for your primary server so that you can bring up a secondary server on demand that features all the same programs and applications you use. Data backed up online is useless if you don’t have the software program required to open it.
Solution: Document Management Software
What do you do with checks sent in by clients? Photocopy them and file paper in a binder? Stop it!
Instead, scan all the checks you receive to an electronic document, then file that document in your document management software, indexed and labeled with appropriate information. May I suggest Document Type = Client Check? Then you can retrieve all checks you’ve received by clients for any date range with a quick search in your document management software.
Solution: CRM
Most advisers know the value of a properly-implemented CRM system. But I suspect NASAA comes across a few firms that still don’t have a CRM, and thus, have a hard time delivering any kind of systematized profile information regarding the clients they serve. With CRM, so much of a client’s characteristics are captured and recorded, making them easy to access every time an exam rolls around.
Solution: Document Management Software
Still have a paper-based compliance manual that sits in the CCO’s office? And what about your spreadsheets that show when your firm last tested its business continuity plan? On a server somewhere?
Consolidate all of your compliance-related paperwork and workflow into a central repository stored in document management software. Better yet, make sure that you have access to that compliance repository when away from the office and in the event your office loses power. Remember online backup and hosted servers I mentioned earlier? Your business continuity plan won’t do you much good if you can’t get in to your building to read it. Move it into a secure system that gives you the ability to access it remotely and quickly retrieve those documents you created to prove you’ve tested your procedures. Another solution to consider for documenting compliance testing is Compliance11, covered in this Morningstar Advisor column.
That’s the first half of NASAA’s Best Practices. Check back later for Part 2 of this series where I finish the list with additional tools and techniques to simplify your regulatory compliance.
Thank you, Steve.
. . .
I’ve had a relatively quiet week this week before I hit the conference circuit once again. Over the next several weeks, I’ll be presenting at CabinetNG Collaborate 2011, NAPFA Practice Management & Investments, and Schwab IMPACT 2011. See all the details on my speaking page.
Now on to this week’s stories of interest:
I missed last week’s post for Morningstar Advisor, Fast-Track Your CRM Selection. If you custody with TD Ameritrade, you might find this CRM screening tool highly useful.
Fidelity launches new salvo in custodian technology “war” from InvestmentNews.com
[I had the privilege of presenting at Fidelity’s Technology In Practice event last week at the custodian’s headquarters in Boston. Davis Janowski attended and provides a great review of the takeaways advisors learned from the event.] Last Tuesday, Fidelity brought out the big guns at its Technology in Practice day held at the company’s hands-on research think tank in Boston.
Is Financial Planning A “Set It And Forget It” Process? from Blueleaf.com
[My latest contribution for Blueleaf highlights the increasing options advisors have for account aggregation, but once client data is consolidated, do advisors do anything useful with it?] Creating an initial plan is essential to identify things your clients can do to best meet their goals and objectives right now. But what many advisors fail to do is proactively review the plan according to new data collected as time goes on.
Also, the folks over at Arkovi launched a brand new resource center with terrific information for advisors looking to add social media to their toolkit. Click here to visit the Arkovi Resource Center (free account registration required).
Finally, if you’re interested in attending the T3 Conference being held in our backyard in Dallas, registration is now open. The conference runs from February 16 to 18 and discounted early bird registration ($275) ends October 31. Click to register: http://t32012.eventbrite.com/
I’ve been on the road Monday through Thursday, sharing information on how advisors can use transformative technology in their businesses today. Despite my travel, I am still keeping you informed on the top stories in tech this week.
Here are this week’s stories of interest:
Orion Updates Advisor Desktop for RIAs from AdvisorOne.com
[Orion is in the news again, this time announcing updates to its rebalancing tool to provide household-level management.] Orion Advisor Services unveiled the latest release for it Advisor Desktop portfolio management suite for RIAs on Monday with new features designed to make it easier for advisors using the primary database management tool to rebalance their clients’ portfolios and create tax efficient strategies at the household level.
Fidelity is set to add Envestnet, Redtail, Morningstar, AppCrown and Salesforce to WealthCentral from RIABiz.com
[If you’re a major custodian, you have technology news to share leading up to November. Case in point: Fidelity announces key integrations for its advisors.] As part of an accelerating arms race among RIA custodians, Fidelity Investments has more than doubled — to 11 from five — the number of vendors it plans to invest in integrating as part of its WealthCentral platform.
Trust Company of America is giving RIAs more weapons for free-wheeling from RIABiz.com
[Trust Co. of America announced its Liberty mobile platform two weeks ago. Hear from affiliated advisors on the benefits they see in the system.] Advisors currently using the product say that it takes the use of a mobile platform to a new level because everything that can be seen on a PC can be seen on a smart phone or tablet in the exact same configuration.
Advisor Software Debuts goalGetter App for iPad from Financial-Planning.com
[Today, if you don’t have a solution for mobile devices, iPad in particular, you might as well go back to the drawing board with your strategy. Here’s another iPad app for advisers from Advisor Software.] Advisor Software, a provider of wealth management applications for financial advisors, announced that its goalGetter financial planning application for the iPad is now available for free download from Apple’s App Store.
It’s the quiet before the storm. There are just a handful of updates this week, as I suspect many of the major technology providers are saving their big stories for October.
But first, you may be failing to deliver services that your clients expect. Find out what that may be in Clients Want Great Service. Does Your Financial Advisory Firm Leave Them Hungry?, my latest post for Blueleaf.
Now on to this week’s stories of interest:
How advisers can really make tech pay off from InvestmentNews.com
[Davis Janowski again ties to uncover what makes larger firms more successful with their technology. The revelations are limited to 1) a “highly customized version of Salesforce.com” with no insight on cost, 2) how easy breakaway brokers have it as they generally don’t need to deal with legacy systems, and 3) the significant leverage portfolio rebalancing software adds.] Financial advisers often equate technology with progress. And while it can be one of the major keys to unlocking profitability, it also can be responsible for strangling and stifling your firm.
12 Steps to Near-Paperless Bliss from AdvisorOne.com
[Bill Good is taking his office mostly paperless, clearing out 40 four-drawer filing cabinets. While the 12 steps outline a suitable capture system, I feel the important discussion of indexing and filing into a true document management system is omitted.] Digitizing paper files and routine processes is so valuable that it has to be at the top of advisors’ lists on ways to be more productive
If your advisory firm’s value proposition consists of personalized investment advice tailored to your clients’ individual needs, your business might be in trouble.
Today, Personal Capital launched its website where consumers can log in and view a financial dashboard of all their aggregated accounts. Backed by former Intuit chief executive Bill Harris, Personal Capital is the latest effort to deliver personalized investment advice to the masses using scalable web and mobile applications.
I’ve included the introductory video of Personal Capital’s benefits below (click to view on Vimeo.com)
In addition, Jessica Toonkel highlights more details of Personal Capital’s launch, including their proposed fee structure, for Reuters.
Click here to read Internet entrepreneur dives into wealth management at Reuters.com.
Summer is “officially” over. How do I know (besides the snow blower inventory in Wisconsin, thank you Nathan Gehring)? Temperatures have finally dipped below 100 degrees here in Dallas, and the floodgates have opened on technology news for financial advisers. Most guilty this week is RIABiz with multiple contributions.
Here are this week’s stories of interest:
If you work hard but feel like you’re not making any progress, view my latest update for Blueleaf, Was Otis Redding Singing About Your Advisory Practice?
Salesforce.com is more than a CRM app from InvestmentNews.com
[Again, Salesforce continues to dominate technology talk for financial advisers. Here Davis Janowski highlights how the Salesforce platform does much more beyond the basic CRM functions.] When thinking about Salesforce, advisers shouldn’t view it as stand-alone, dedicated CRM software.
AdventConnect Report: Black Diamond will sell rebalancing software and better reporting on alternative investments from RIABiz.com
By the start of 2012, Black Diamond Performance Reporting, now part of Advent, intends to provide rebalancing software as part of its capabilities and to vastly improve its ability to report on alternative assets.
Fidelity jumps into the game of providing technology for picking RIA technology from RIABiz.com
[I noted Fidelity’s new spreadsheet tool in last week’s Bits & Bytes, so thankfully Lisa Shidler dipped in for more research on the tool for RIABiz.] Before RIAs rush out and spend tens of thousands of dollars on new technology, Fidelity Investments executives want them to look at its new tool for determining the economic impact of costly technology purchases.
As advisors flunk social media 101, CRM makers are starting to pick up the slack from RIABiz.com
[In this article, Nevin Freeman points out Pivotal CRM’s social features. I’ve been spoiled by social aggregators that integrate with email programs like Gmail and Outlook and I share those tools in my presentations to advisers.] Customer relationship management suites like Salesforce.com are beginning to put more emphasis on interacting with online social networking sites like Facebook and Twitter – and it may answer a prayer or two for RIAs who are tired of asking their 14 year-olds for advice.
Leading up to this week’s FPA Experience 2011, the largest annual gathering of financial planning professionals, Junxure today announced the release of Version 9 of its CRM software.
The latest version offers additional security features and updates to the Import Wizard interfaces. In the press release, Junxure president Greg Friedman said, “Junxure 9 delivers the tight controls that will be necessary for the success of upcoming custodial interfaces.”
Click here to read the full press release (eReleases.com)
Also, additional details on Version 9’s features can be viewed in the company’s September 2011 newsletter.
