Smarsh continues to impress me as an innovative force and market leader in email archiving and compliance. They recently announced a Smarsh CRM product to help users be more efficient and productive (a post I’ve had in my drafts section ever since my son was born!).
Today I read an article on a new service that may prove to be very useful and timely to the adviser community.
Smarsh has announced a social media (a.k.a.Twitter) message archiving service at a Twitter conference this week.
Update: See the article FPA, NAPFA and IAA to fight SEC’s pop-quiz proposal from InvestmentNews.com where group officials say “that the proposal is misguided and would saddle advisers with unnecessary costs.”
It should be no surprise to financial advisers following the Madoff Ponzi scandal that the SEC recently issued proposed rule changes to custody requirements. The release, IA-2876 (click to view PDF from SEC.gov), addresses custody requirements of client funds and securities and is open for a 60-day comment period through July 28, 2009. Should the proposed rules be adopted, advisers may face additional compliance fees of $8,100 on average.
Surprise Examination Proposal
The SEC proposes that advisers with custody of client assets must undergo an annual surprise examination by an independent public accountant, regardless of whether or not assets are held by a qualified custodian. The premise behind the surprise examination requirement is to provide “another set of eyes” on client assets to prevent fraud and misappropriation of client funds by registered advisers. Reports of theft and fraud by advisers have plagued the SEC since the Madoff scandal erupted in late 2008. So what does this mean for advisers meeting the custody definition?
I recently received my May issue of Financial Advisor magazine and read David Lawrence’s article on document management titled Worth the Investment (click here to view online). This article describes the benefits of implementing an effective and easy-to-use document management system, a.k.a. electronic content management (ECM) system.
In the article, though, Mr. Lawrence said one thing that grabbed my attention. He wrote (my emphasis added):
A common mistake made by some firms is to use a system that saves documents in a PDF instead of a more secure format such as a TIFF. This means documents can be altered after the fact, and the firm risks potentially violating federal regulations. While some scanner manufacturers have addressed this issue with post-imprint symbols and other coding mechanisms to ensure authenticity, there are still lingering doubts about the security of the original documents.
Now hold on for one minute. TIFF files are “more secure” than PDF files?!?
There’s a good discussion going on over at the FinancialPlanning.com discussion boards on CFP® Examination review materials. Part of the conversation includes advice on how many hours should be devoted to studying and preparing for the 89 topic exam.
Since many of the subscribers and visitors to FPPad.com are CFP® Certificants, I set up a poll to get a sample of how many hours others have spent preparing for the exam. I spent about 200 hours preparing for the July 2008 exam.
Take our poll below (if vieweing in an RSS reader, click here to submit your answer):
[polldaddy poll=”1614697″]
Related Posts:
I apologize for the delay between posts and the lack of new content. I’m adjusting to life as a new father and just returned from a trip to Dallas where I looked for a new home (and succeeded).
I’ve been keeping up as much as I can in the meantime and usually update on Twitter. Follow my most recent tweets or check out the left hand column on FPPad for my messages.
I’ll be back soon (I swear!) with thoughts on CRM, practice management, and other hot topics.
Check out this awesome tshirt from Carl Richards over at BehaviorGap.com.
A story from New York Times personal finance columnist Ron Lieber quickly traveled through the Twitter universe and landed in my inbox. Lieber is a client of NAPFA-member AFW Wealth Advisors and was informed by the firm that one of their advisers, Matthew Weitzman, is under investigation for “certain irregularities in a limited number of client accounts.”
Also, see coverage from Roger at The Passionate Planner and Andrew Gluck at Advisor Blog Central.
Let’s face it. Your clients may very likely see this article. Once they do, they’re going to ask you what you are doing to protect their accounts from this kind of fraud.
How Advisers Can Steal Funds
The webinar I participated in last week about custody issues when retaining client login credentials has really generated a lot of media coverage. Yesterday an article was featured in Advisor Perspectives.
Today, Financial Advisor Magazine posted Access To Client Encrypted Log-Ons Presents Quandary on its online content. Please read it when you have a moment.
I have also answered many questions from advisers on best practices for updating disclosure documents, protecting credentials saved on internal systems, and using aggregation applications, such as ByAllAccounts. If you need assistance with any of these issues, feel free to post comments here or email me privately at bill [at] fppad [dot] com.
Yes, posts to FPPad have been sporadic of late, but trust me, work is going on behind the scenes.
In particular, I’ve been working with several individuals on communicating the risks and responsibilities when it comes to using client login credentials (e.g. login and password) to access captive or held-away accounts. As client services continue to expand, advisers are aggregating information on held-away accounts to generate reports that include all of a client’s assets, not just those that are held with the adviser’s custodian of choice.
Last week, I participated on a webinar hosted by ByAllAccounts that addressed the issues of custody when adopting this practice.
Today, Advisor Perspectives has published my article titled The Custody Conundrum. I trust that you will find most of the answers to your questions when it comes to custody and the practice of retaining and using your clients’ account logins.
Interesting developments have occurred over at Financial Advisor magazine’s online extras this week. First, on April 6, Dr. Somnath Basu wrote an article titled Restoring Trust in the CFP Mark. I encourage you to read it.
While Dr. Basu is correct that the industry needs to do better in its service to clients, he lumps CFP® practitioners together with all financial service professionals, whether they be regulated or not.
So in response, CFP Board CEO Kevin Keller published a response to Dr. Basu titled In Defense of the CFP Mark. Keller clarifies several of Dr. Basu’s misconceptions in his original article and stresses how all advisers must operate with “full accountability and transparency” to clients.
Take a few mintues to read these articles and post comments on FA Magazine’s website.
Update: Now read this post by Dr. David Edward Marcinko at the Medical Executive Post. Dr. Marcinko finishes his comments with this:
And so, why do I shake my fist at Somnath Basu? It’s admittedly with congratulations, and a bit of schadenfreude, because he wrote an article more eloquently than I ever could, and will likely receive much more publicity [good or slings-arrows] for doing so. You know, it’s very true that one is never a prophet in his own tribe. Oh well, Mazel Tov anyway for stating the obvious, Somnath. The financial services industry – and more specifically – the CFP® emperor have no clothes! Duh!
