Survey reports continued trend toward outsourcing compliance functions

The 2016 Thomson Reuters survey details its findings on the compliance costs and upcoming challenges financial firms face dealing with an ever increasing compliance focused environment. The results come from more than 300 global financial firms. The survey builds on results over the last seven years.

Findings indicate a trend toward outsourcing of compliance functions, with a quarter of firms now outsourcing parts of compliance functions.

The survey cites a lack of in-house skills and resources available as reasons.

We foresee this trend continuing as compliance costs rise and compliance officers continue to be asked to do more without adequate increases in staffing.

Source:

https://risk.thomsonreuters.com/sites/default/files/Cost-of-Compliance_2016_0.pdf

 

 

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SEC continues intense focus on Financial Firms’Cybersecurity Policies

Have you checked your firm’s cybersecurity policies and procedures lately?  If not it could cost your firm big time.

The SEC brought actions against a St. Louis based investment firm for cybersecurity breaches. The SEC alleges that the firm failed to develop adequate cybersecurity policies and procedures. The investment firm also improperly stored customer data, potentially compromising customer sensitive information and data.  The firm agreed to be censured and pay a $75,000 penalty.

The SEC has outlined 3 broad categories of cybersecurity protections that financial firms must implement:

  1. Conduct frequent cybersecurity risk assessments regarding firm practices related to proper security practices
  2. Create cybersecurity strategies that prevent and detect cybersecurity and policies to respond to potential security threats
  3. Conduct on-going cybersecurity training and reinforce procedures with staff

sources:

https://www.sec.gov/news/pressrelease/2015-202.html

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A Financial Firm’s Guide To Website Archiving Terms

Financial advisors, compliance officers, marketing and technology officers – anyone involved in your financial firm’s Website – must understand the importance of adhering to stringent government regulations required for archiving your Websites.  Hefty penalties can be imposed on firms for failure to properly adhere to the specific rules.  The process of properly archiving your Website can be arduous, costly endeavor especially when performed in-house.

Some of key terms used by archivists when referring to Website archiving includes:

Backups: Means to copy information to another medium such as to a disk or tape as a precaution in case information gets corrupted or destroyed. *

Crawl: Refers to the capture of a firm’s Website that is conducted by a crawler.

Data center: Data center is the physical location where the archiving firm stores, preserves and retrieves a firm’s Website archives.

 Immutable: Unchangeable, that which cannot be changed, altered or modified in anyway.

Records: Any recorded information, including but not limited to documents, videos, audio files, created by a firm housed on its Website.

Record retention policy:  The policy defined by a firm’s record retention policy, refers to the length of time a firm is required by its regulatory bodies to preserve its Website archives.

URL (Uniform Resource Locator):  Is the location of a resource on the Web.

 WArc File: is made of disaggregated WArc records.

 Website Archive: Refers to the collection of a firm’s Website published information that has been recorded on the World Wide Web, and is preserved for regulatory purposes and for accessing at a later point in time.

Web Archive:  A collection of published materials on your Website that a firm has either made arrangements for or has accepted long-term responsibility for preservation and access in keeping with an archive’s user compliance policies.

WORM (Write-Only Read-Many): Describes data storage that once written, it is immutable and cannot be changed. This unequivocally proves that the information stored has not been modified or changed in anyway.*

* Backing up your Website, while important, is different than storing your Website archives to WORM. Backups are simply that, mere backups of your information and can be changed and modified. When Website archives are stored to WORM format, this means your files are immutable and cannot be changed. WORM storage is required by many financial firms.

 

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FINRA 2016 focus area and penalties

It’s a theme we’ve recently and repeatedly heard. FINRA wants financial firms to have a compliance culture. In fact FINRA plans to assess whether firms are abiding to compliance regulations, on a daily basis – not just when they’re being examined.

Earlier this year FINRA released its 2016 Regulatory and Examination Priorities Letter whereby it features where FINRA has its highest regulatory concerns.

FINRA has vowed to ensure financial firms create a compliance culture and has levied some pretty high fines to show how serious they are about it.

Some FINRA focus areas and penalties include:  conflict of interest and ethics, supervisory failures, and risk management and controls.

Additional focus:

– Improper electronic storage – FINRA has levied numerous fines over the years for lack of technology oversight, including electronic archiving and storage of emails and Websites. Most recently, FINRA has focused on Cybersecurity and how firms are addressing recent threats.

 

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71 percent of Americans admit to being afraid of talking to a financial advisor

71 percent of people are petrified to meet with an advisor – someone that could potentially help them with their financial goals, such as have enough money to retire comfortably.

According to a survey by Harris Poll, Americans are fearful of meeting with a financial advisor.

Nearly 50 percent admitted to being scared that talking to an advisor would end up costing them too much money.

Other findings:

–       Almost 40 percent revealed that they’re afraid that the advisor will share bad news with them about their finance situation.

–       Half reported being reluctant to trusting an advisor with their personal financial information.

–       Over 40 percent believed that an advisor wouldn’t be able to help them with their specific financial needs.

That must be why The Society of Actuaries cites that only about 50 percent of people actually meet with an advisor.

There are legitimate fears and obstacles that investors have about working with a financial advisor.

However, this presents a great opportunity for astute financial advisors who truly understand these investor fears to address these concerns and to help the other 50 percent of people who aren’t already work with an advisor.

Source:

http://www.mcadamfa.com/financial-advisor-phobia-71-percent-of-americans-say-they-are-scared-of-talking-to-a-financial-advisor/

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Still not convinced you need a Website?

If your potential client is a millennial, you’ve just knocked yourself out of the race. The same goes for baby boomers and ditto for any other generation you’re looking to target.

The statistics make a compelling argument that any financial advisor who ignores social media and chooses not to have a strong online presence is officially a marketing luddite!

According to Pew Research Center, 87% of American adults use the Internet.

Nearly two-thirds of American adults 65% use social networking sites for research about people and companies.

So if you don’t have a Website or a blog telling about yourself and your capabilities and how you help people like them reach their financial goals, you should consider yourself out of the race.

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Why financial advisor Websites are a must!

Long gone are the days where you’d pull out of the drawer your Yellow Pages Phonebook to find a business or service that you need. Now a days you’d simply “google it” or ask Suri, Cortina, or Alexa for the answer.

Yet despite our obsession with anything/everything digital, I’m still surprised at the number of financial advisors who still don’t have a Website or blog. Yes maintaining and keeping a relevant and compelling site takes some work and energy resources but the cost of not have a Website seems too risky.

People looking for a financial advisor either ask a friend or colleague who they use but after this, the next place they’ll go is to your Website.

And what if you don’t have one, what type of message does that send?

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Not storing your information in WORM format? It could cost you

Broker-Dealer Scottrade, Inc. agreed to pay $2.6 million to the Financial Industry Regulatory Authority (FINRA) for failure to retain its records in non-ersabsable WORM (Write-Once Read-Many) storage format.

Regulatory agencies such as FINRA, Securities and Exchange Commission (SEC), Commodity Futures Trading Commission, and many other regulatory agencies, have stringent rules regarding the storage of files, such as your Website, emails. Information must be stored to an immutable format for the regulatory time frame, typically six years or longer.

Financial firms need to ensure that your required information, such as your Website, emails, and other information is properly being archived to WORM and that it covers your required regulatory time period.

This isn’t the first time FINRA has issued hefty fines to financial firms for improper storage and archiving and it won’t be the last.

Sources:

http://www.lexology.com/library/detail.aspx?g=80a1814f-c3ae-4517-afeb-003c0fc04a41

 

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Authenticity trumps buzzwords for financial advisor Websites

When it comes to digital marketing, too many advisors fall victim to using clichéd boilerplate language when marketing their skills to potential prospects and clients.

Is there a single firm out there that claims not to be “customer-focused?“ Of course there isn’t! So why bother stating the absolutely indistinguishable phrase that you’re “customer focused” or “results-oriented.”

These phrases fail to resonate with prospective clients because they’re a given.

Here’s a short list of some of the egregious phrases to avoid:

  • Fiduciary
  • Expert
  • Results-oriented
  • Client-focused
  • Holistic
  • Objective
  • Transparent
  • Best interest

Instead, firms may gain traction with clients by speaking in a more authentic manner in the same way you communicate face-to-face with clients.

Use more personal and relatable words. Personal stories are a great way to share your “why” and “how” you got into the business and what type of people you help and work with best. People won’t work with you until they understand the why and how of you. Share any hardships or lessons that have made you better at what you do. Also talk about any special interests or social causes that you’re passionate about and support.

Sources:

Investment “Advisors using the wrong words on websites to attract new clients”  Newshttp://www.investmentnews.com/article/20151111/FREE/151119973/advisers-using-the-wrong-words-on-websites-to-attract-new-clients#.VkYjRBR4xsA.email

Seth Godin “The simple way to get better at business writing”http://sethgodin.typepad.com/seths_blog/2015/11/the-simple-way-to-get-better-at-business-writing.html

Simon Sinek “Start with the why”    https://www.startwithwhy.com/Simon Sinek “Start with the why”

 

 

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Cloud storage does NOT mean WORM compliant

Cloud storage is a technology that stores data on remote servers that are accessed through the Internet or cloud.

It can be an inexpensive option for storage but just how safe is it to archive your company information in the cloud?

Not safe at all according to many studies, including findings from computer scientists at Johns Hopkins.

The Hopkins researchers found that data shared in the cloud can be vulnerable to attacks.

By its name alone, storing data in the cloud means that you’re not storing sensitive information in WORM (Write-Once Read-Many) storage format – as required by SEC/FINRA data archiving rules.

It’s prudent to be absolutely certain how your Website and data is being archived. As those firms that use Amazon and other popular cloud providers, your information isn’t secure if you are leveraging the cloud.

 

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