Paperwork is finally completely removed from the process
Technology often has been a way for broker-dealers to differentiate themselves from the competition. As technology becomes increasingly vital to the efficiency and success of a representative’s business, financial advisors actively are seeking out the firms that can offer tools that will make a real impact on their day-to-day operations.
For the past several years, many broker-dealers have trumpeted their technology solutions to advisors. Ten years ago, these so-called solutions were more flash than substance but were still successful recruiting tools. Today, however, substance rules.
The problem with technology solutions in the past is that they were not seamlessly tied to any of the other mission-critical systems and therefore did not directly communicate with compliance and operations functions in the back office. It was a classic case of misrepresentation–broker-dealers promised representatives that technology solutions would make their lives easier. In reality, they made the firms’ back offices more efficient, but the advisor was still stuck with piles of paperwork and endless data entry. Because their solutions didn’t deliver on functionality, the firms couldn’t deliver on their promises of efficiency and streamlined processes to financial professionals.
The advent of a new technology, electronic signature (or e-signature), finally has made it possible for broker-dealers to make good on their promise to advisors. By delivering back-end efficiency for the firm and an integrated, paperless operating environment for the rep, the industry’s latest technology solution is the equivalent of the Holy Grail for advisors.
In the past, representatives had no other option but to print hard copies of all documents and physically deliver them to their OSJ (Office of Supervisory Jurisdiction Managers) and the broker-dealer home office. Reps also were required to keep hard copies on file in their offices to comply with SEC books and records requirements. All of these hard copies quickly added up to a veritable mountain of paperwork.
In addition to the storage capacity problems caused by the sheer volume of paper documents, keeping track of all these hard copies as they continually changed hands inevitably resulted in an endless game of phone tag between OSJ and back-office staff. As compliance inquiries and questions about incomplete documents arose, the process became slow and muddled, resulting in wasted time and frustration for advisors and their clients alike.
With e-signature technology, paperwork–the bane of advisors’ existence and the barrier that keeps them from spending valuable time with their clients–is finally completely removed from the process. E-signature condenses the entire process for account openings, account updates or order placements down to one easy step. The seemingly insurmountable mountain of paperwork that stood between advisors and their clients in the past can be reduced to a tiny electronic signature pad that allows clients to “e-sign” all required forms instead of navigating through pages and pages of paper documentation.
The best systems also provide “e-file cabinets” that eliminate the need to store hard copy files in-house or offsite, and also integrate with an automated workflow component that compliance personnel can utilize to retrieve these online original documents.
Comprehensive Compliance Support
In the current environment, any technology solution that doesn’t make it easier for representatives to keep up with ever-increasing compliance requirements won’t have much value for today’s financial professionals. Historically, compliance rules engines have been lacking in POS applications, but today’s systems are fully integrated with the back office so that documents can be reviewed in real time and compliance rules checks can be completed more efficiently. Once the e-signed document is in the system, it becomes the single copy, digital original. Compliance personnel also can have real-time access to documents at the push of a button.
The most effective systems go beyond the traditional “completeness” check and incorporate “good order” checks–specific checks, previously performed manually, that are required by the NASD and the SEC on account documentation–into the process. While good order checks do not actually represent final approval, they automatically and consistently validate that the representative has input and greatly facilitate the process for reps, back-office staff and OSJ personnel.
With any new technology, the issue of usability is always a factor. In the case of e-signature, advisors may be less concerned with their own ability to use the technology and more concerned about whether their older, high-net-worth clients–who they view as strictly “non-technical”–will be comfortable with making the transition from ink and paper to a screen with a plastic stylus. In our experience, all the worry has been for naught. The vast majority of clients who have used e-signature technology have been comfortable with the technology, and reps are asking their broker-dealers, “What took you guys so long?”
The key to e-signature’s usability and the reason even the most “non-technical” clients are comfortable with it lies in the simplicity of its design. This is a tool that requires nothing more of users than performing an action they probably have been doing in supermarkets and department stores for several years–writing on a small screen with a stylus.
The front-end application, the electronic signature pad, doesn’t look like anything new, but what e-signature accomplishes behind the scenes is highly sophisticated. The amount of time saved for the advisor and the client is quite substantial. In the old days of paper and pen, the preparation and completion of paperwork could take up to a half hour. In the e-signature environment, the time it takes to complete the same process has been slashed to five or 10 minutes, depending on how long it takes for the client to read the documents on the screen.
The biggest challenge for advisors is not the device itself but understanding how e-signature fits into their existing front-end processing application. When they discover how seamlessly this technology can be integrated into their current systems and observe how e-signature improves the efficiency of communications between the front and back offices, advisors will wonder how they ever survived without it.
Robert Dearman is assistant vice president of broker-dealer systems at Jackson National Life/National Planning Holdings, Lansing, Mich. He can be reached at Robert.firstname.lastname@example.org.
The industry’s latest technology solution is the equivalent of the Holy Grail for advisors