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BNY Mellon’s Pershing Affiliate Albridge Solutions Releases New Study
Detailing Best Practices for Broker-Dealer Sales Oversight
JERSEY CITY, N.J., December 15, 2010 – BNY Mellon’s Pershing affiliate, Albridge Solutions, announced today the availability of
Broker-Dealer Sales Practices Oversight: Secrets of Their Success. The independent study examines the changing regulatory environment, discusses the potential impact on broker-dealers and provides guidance on best practices for improving oversight of sales practices.
The study, developed with Beacon Strategies, LLC, a research and consulting firm, reveals that regulators are aiming to implement more stringent sales practice oversight standards in the near term, including imposing higher uniform compliance standards on all broker-dealers. These standards have become a necessity for both regulators and broker-dealers in order to increase efficiencies, create clear expectations, improve communications and make compliance audits more systematic. They will also help regulators gain a deeper understanding of each firm’s business model and markets.
Key findings from the study include:
Electronic data entry at the source – Digitally recording client "know-your-customer" (KYC) and order information helps to centralize account data, eliminate errors, and prevent unnecessary duplication and delays that can occur when this information is paper-based and hard-copy filed. Despite these benefits, the study reveals that more than 50% of data entry for both brokerage and check-and-app business is being processed by broker-dealer home office personnel, rather than at the source.
Elimination of paper – While it remains difficult to create a completely paperless environment in the securities industry, significant strides are being made to eliminate paper and paper-based processes. The study finds that 60% of broker-dealers are systematically converting paper into PDF and TIF files, and more than 30% report they are using tools to convert scanned documents into digitized data. Underlying this best practice is the realization that paper is difficult to centralize and organize and expensive to store securely.
Use of a centralized books and records repository – In the past, the technology needs of some broker-dealers revolved around one application – the commission payment system – which was often retrofitted to meet any new compliance needs that emerged. As a result, client profiling has often been driven by the inconsistent requirements of different manufacturers and products. The use of a centralized books and records repository enhances compliance department control over the quality of data that is captured.
Reduced reliance on "one-off" compliance methods – Consolidating information to serve the needs of compliance staffers and regulators, such as monitoring unusual sales practices or employing risk-scoring systems to gain a quantitative view of overall risk, improves efficiency and profitability. It can include making data easily accessible for purposes of running ad-hoc reports and leveraging industry experts and consultants for guidance to develop streamlined automated compliance surveillance. According to the study, just 30% of broker-dealers are using automated systems for compliance surveillance.
An emphasis on compliance staff productivity and expense management – Reliance on outdated processes and legacy systems creates extra costs that are absorbed by the broker-dealer, advisor and end-client. While most broker-dealers have established methods for measuring the field in terms of gross dealer credits, asset-based fees, AUM and cross sales, they lack similar metrics for measuring how much value the compliance department or individual staffers are adding in relation to cost and productivity.
"The rapidly evolving regulatory environment will place additional resource and profitability pressures on broker-dealers," said Gregory Pacholski, chief executive officer of Albridge Solutions. "These firms need to adopt industry leading compliance tools and integrated technology solutions to help them feel confident in being able to meet these challenges and grow their businesses."
"Securities regulators are providing a clear sense of direction of future compliance standards that will be imposed on all broker-dealers," said Chip Kispert, managing partner, Beacon Strategies. "Broker-dealers who fail to prepare or are lagging behind today’s best practices will quickly find themselves at a competitive disadvantage."
To receive a copy of the study, please contact Albridge at sales@albridge.com.
Albridge Solutions, an affiliate of Pershing LLC, is a leading provider of enterprise solutions, custom technology and business consulting services to institutional and retail financial organizations and independent registered investment advisors. Albridge draws upon its financial services experience and technology expertise to help financial organizations enhance their operating performance and maximize their productivity. Albridge's wealth management technology consolidates and reconciles client account information from hundreds of data sources that represent banking, brokerage, insurance, retirement, managed accounts and more. Additional information is available at www.albridge.com.
Pershing LLC (member FINRA/NYSE/SIPC) is a leading global provider of financial business solutions to more than 1,200 institutional and retail financial organizations and independent registered investment advisors who collectively represent approximately five million active investors. Located in 21 offices worldwide, Pershing and its affiliates are committed to delivering dependable operational support, robust trading services, flexible technology, an expansive array of investment solutions, practice management support and service excellence. Pershing is a member of every major U.S. securities exchange and its international affiliates are members of the Deutsche Börse, the Irish Stock Exchange and the London Stock Exchange. Pershing LLC is a BNY Mellon company. Additional information is available at www.pershing.com.
BNY Mellon is a global financial services company focused on helping clients manage and service their financial assets, operating in 36 countries and serving more than 100 markets. BNY Mellon is a leading provider of financial services for institutions, corporations and high-net-worth individuals, providing superior asset management and wealth management, asset servicing, issuer services, clearing services and treasury services through a worldwide client-focused team. It has $24.4 trillion in assets under custody and administration and $1.14 trillion in assets under management, services $12.0 trillion in outstanding debt and processes global payments averaging $1.6 trillion per day. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation. Additional information is available at www.bnymellon.com.