More On Legal & Compliancefrom The Advisor's Professional Library
- Risk-Based Oversight of Investment Advisors Even if the SEC had a larger budget and more resources, it is doubtful that the Commission would have the resources to regularly examine all RIAs. Therefore, the SEC is likely to continue relying on risk-based oversight to fulfill its mission of protecting investors.
- Preventing and Dealing with Client Complaints Although the SEC has not provided specific guidance on how client complaints should be handled, a firms policies and procedures should provide clear direction how to do so, as neglecting complaints can exacerbate a bad situation.
Between the credit crunch and the relentless pace of technological innovation, the last few years have taught us that advisors are only as captive to their circumstances as they choose to be—and everyone needs to be able to roll with the punches.
At this point, advisors have almost complete control over every aspect of their business. They can replace the investment platform, switch custodians or broker-dealer affiliations, or swap out all their technology from the ground up.
Sometimes it’s the advisor who decides it’s time to make a change, and that’s terrific. More often, the motivating factors are unfortunately beyond the advisor’s control. Once-friendly vendors get acquired by hostile competitors. Legacy software packages stop getting the support they need or stop working entirely. Even the promotion of a key service rep can turn a great relationship into a problem that needs to be fixed as fast as possible.
Either way, change is universal and inevitable. Given that proposition, the best thing advisors can do is make sure their business is as flexible as possible, so when change comes, the process runs smoothly and any disruption is minimized.
Pack Your Data “Suitcase”
The core of your business, of course, is your clients and the files that represent your relationships with them.
Those files contain vast amounts of information, and that information is fragmented into competing proprietary formats and platforms, some of which might be around in a year or two, some of which won’t. When your data is tied to one of those formats, those accounts are effectively at the mercy of the vendor who maintains them. The more formats, the more vendors, which means more opportunities for something to go wrong and fewer degrees of freedom for you.
Wouldn’t it be great if your data could travel independently of all the clearing and custody platforms, reporting applications, asset management tools on which those files currently reside?
What advisors need is application-independent data that easily travels with the advisor from platform to platform, firm to firm, application to application.
Think of it as a suitcase full of everything necessary to your practice—all the transactions, performance reports, trading history, CRM—ready to be unpacked and plugged in as you adopt new technology.
Moving Across Firms; Moving Across Platforms
It will be good to know you can move your accounts to a new brokerage firm, clearing platform or custodian with a minimum of fuss. This is more than career flexibility and smoothing the path between compensation models. It is basic survival planning.
Given the amount of upheaval in the industry in the last few years, you might wake up tomorrow and find that a firm you’re affiliated with has been bought out by a bank or broker-dealer and now all the accounts need to move to the new platform, or you need to move somewhere else.
Portability is the key. You want your clients to move with you, even if your firm or affiliations change overnight. Vendors come and go. Firms, platforms, business models come and go. But if your client files are in an application-independent format, they come with you.
You can sleep better at night. And until that mythical day when the industry calms down, that’s the sweetest reward of all.