Regulatory Compliance E-newsletter - August
Posted On 8/10/2015 11:38:00 AM
Feature of the Month
How to build an effective cybersecurity and IT risk management program
Is your firm currently struggling to build or strengthen a cybersecurity or IT risk management program? Are you finding it challenging to make your IT colleagues adopt a ‘compliance hat’?
The upcoming NRS Cybersecurity, Technology and Marketing Compliance Forum 2015 is designed to provide practical solutions, with speakers guiding attendees through worked examples they can take back and immediately implement in their firms.
- Establish protocols to manage data breaches during, following or after a potential or actual data breach
- Determine the legal perspective of how to manage the integrity of your firm’s data during a breach
- Compile a checklist - or develop an existing checklist – to launch compliance procedures for your firm’s cybersecurity, IT risks and disaster recovery protocols
- Apply effective cybersecurity, IT and disaster recovery risk management
Plus, hear from compliance and cyber-experts from firms including: K&L Gates, Garden State Securities, Commonwealth Financial Network, Starkweather & Shepley, SEC and MFS Investment Management.
For full details and to register today please visit our website.
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Reduce fund expenses and preserve shareholder value
Many Financial Intermediaries have begun to favor and transition from use of networked accounts held on the Transfer Agent (TA) to use of separately hosted sub-accounts that roll-up to omnibus accounts on the TA. As a result, the transparency previously available to the TA at the account level dissolves. With the loss of transparency, the savings from transactional exemptions that are employed by funds to mitigate overpayment of blue sky fees go unrealized.
Blue Sky Solution™ Transactional Exemption Module (“TEM”) restores the transparency to omnibus accounts. It gives control back to the Fund by applying user configured rules to existing transaction (DSA) and account position (DSP) data to generate daily sales reporting feeds to a blue sky reporting system.
The benefit of these exemptions would otherwise be lost through omnibus reporting. The TEM solution reduces costs by systemically classifying transactions as reportable or exempt allowing for more accurate blue sky reporting and preservation of shareholder value through tighter expense management.
The Transactional Exemption Module:
- Reduces fund expenses and preserves shareholder value by maximizing recognition of transactional exemptions to reduce Mutual Fund sales based notice filing fees
- Enables fund companies and third party administrators to identify investor purchases that are exempt from blue sky reporting
- Allows a fund to repurpose existing data used in compliance monitoring against frequent trading by investors, to be used for compliance with blue sky regulations which cover the offer and sale of securities in a particular state
- Enables users to set up rules that systematically identify eligibility for the range of states’ exemptions
- Significantly reduces the need for time-consuming, manual research of large trades by systematically identifying transactions in accounts that are eligible as sales to “institutional investors”.
- Provides tools to review account information for trades that are likely prospects for exemption, and to mark the account as exempt for all future transactions thereby eliminating on-going manual research for the account.
- Is a valuable add-on to NRS’s Blue Sky Solution or NRS’s Blue Sky Administration service
Learn more about the NRS Blue Sky Solution System and how it can help you keep your compliance program running smoothly.
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Prepare for the challenges of today’s compliance environment with an NRS investment adviser compliance designation
The NRS Investment Adviser Certified Compliance Professional® (IACCP®) Program was designed to advance compliance as a profession and prepare individuals for the dynamic challenges of a career in investment adviser compliance. The IACCP Program, co-sponsored with the Investment Adviser Association (IAA) since 2007, is a professional education program granting the designation, NRS Investment Adviser Certified Compliance Professional® (IACCP®), to individuals who complete an online and/or in-person instructor-led curriculum, pass a certifying examination, and meet its work experience, ethics and continuing education requirements.
Participation in the program:
- Provides another level of credibility for you and your firm;
- Signals recognition of enhanced investment adviser compliance knowledge and skill level;
- Offers a learning experience that has been proven to produce highly competent and effective compliance professionals; and
- Gives your firm the opportunity to enhance its risk management strategy with an affordable and timely solution.
Apply what you learn as you learn it — the nuances of existing and new regulations, industry best practice, and other tools to help your firm maintain and monitor compliance in a rapidly changing regulatory environment.
Education courses are available online and also in-person this summer at the NRS Investment Adviser Compliance Symposium in Boston on August 11 and 12, 2015
As you work to complete the requirements of the NRS IACCP Program and certify your compliance knowledge, you can refine the necessary knowledge and skill set that successful compliance professionals demonstrate.
To learn more about this formula for success, download the program requirements or call an NRS representative at 1-860-435-0200.
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Robo Advisers: Technological Advances Do Not Eliminate The Need For A Human Touch
Will “Robo-Advisers” eventually lead to full-on robots, eliminating the need for human financial advisers? Even though the usage of, and demand for, robo-advisers is increasing dramatically, it is unlikely that the human element will, at least in the foreseeable future, be deemed superfluous.
******HAL 9000 (2001, A Space Odyssey): “I'm completely operational, and all my circuits are functioning perfectly.”******
Despite Hal’s arrogant assurances, financial planning needs a cognitive touch – a person who can determine various nuances of an investor’s needs. Electronics cannot know of an impending retirement, sudden health issues or perceive a growing dissatisfaction with how things are or are not progressing.
While it is to the benefit of advisers to utilize robo-advisers, particularly for those clients with relatively small amounts of investable money, the responsibility to do right (i.e. fiduciary responsibilities) by clients remains to a large extent on the humans in the equation.
******C-3PO (Star Wars): “Don't worry about Master Luke. I'm sure he'll be all right. He's quite clever, you know... for a human being.”******
At any level of involvement with robo-advisers, advisers must remain cognizant of their compliance responsibilities as well as the ongoing fiduciary duty they owe their clients. The use of robo-advisers may lead to a false sense of security if advisers feel they are relieving themselves of liability with respect to those outsourced functions. The use of robo-advisers does not relieve an adviser of fiduciary duty owed to clients. Advisers utilizing robo-advisers are advised to be aware of (and have appropriate policies and procedures about) the following:
- Due Diligence
- Conflicts of Interest
- CyberSecurity and Privacy Issues
In a possible foreshadowing of regulatory interest in the area, on May 8, 2015, the SEC issued an Investor Alert about automated investor tools, including robo-advisers. The alert outlined due diligence investors should perform before investing, including understanding relevant terms and conditions, limitations of the technology and key assumptions, safeguarding personal information shared online, and a warning that output generated solely by a robo-adviser may not be right for the investor’s needs and goals as a result of the inherent limitations. Advisers should not be afraid to embrace the new technology, but they should be cognizant of the increased regulatory vigilance that will be required of those involved in what is likely to be an initially active area.
******(2010: Odyssey Two): “Whether we are based on carbon or on silicon makes no fundamental difference; we should each be treated with appropriate respect.”******
NRS Consultants can provide an objective third-party perspective, incorporating regulatory requirements and NRS’ deep knowledge of industry best practices to help firms effectively deal with the issues surrounding the growing demand for utilizing robo-advisers, offering guidance in the implementation of appropriate controls.
To find out how NRS can help, contact us today.
NEW - NRS is the compliance partner for Fox Financial Planning Network - AdvisorTouch Symphony:
A Step-by-Step Training Program to Help Financial Advisory Firms Leverage Robo-Technology to Grow Their Businesses and Deliver Services More Efficiently and Profitably. Click Here for more information.
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