A new study to be released in November examines the challenges faced by broker-dealers as they strive to meet compliance objectives and oversee sales practice management, and looks at a number of best practices and benchmarks as a way to help them meet their goals.
The study, titled Broker-Dealer Sales Practices Oversight: Secrets of Their Success, commissioned by Pershing’s Albridge Solutions from Beacon Strategies, LLC, looked at 70 BDs and how they process sales and compliance procedures and documentation. It also evaluated regulators’ responsibilities and the direction in which regulation is headed, and evaluated the different perspectives of the two groups.
The results included a “Top Five” list of challenges facing BDs today, as well as best practices in leading firms and ways in which BDs can advance.
The percentage of firms that ranked each challenge as most important:
- Sales practice monitoring 79%
- Regulatory change 73%
- Suitability review 71%
- Product education 64%
- Operational processes 54%
According to Mark Butler (left), managing director at Pershing, in a phone interview with AdvisorOne.com, there were two main reasons for conducting the study: the fact that many BDs are not highly automated, and thus devoting more time and resources to processes that can be streamlined, and the regulatory environment in which regulators expect more of BDs.
The need to improve processes that are predominantly manual and to improve the audit process and surveillance of sales, he says, can contribute to a company’s bottom line by cutting the amount of time required to perform these functions and making them more foolproof. “We took a look at how firms were reviewing trade blotters,” he says by way of example, “and firms without automation