Technology to help automate and improve the compliance function may not ring a financial adviser's cash register, but it certainly can reduce the time-consuming and potentially costly problems that compliance failures create.
One new product in that area is Compliance Officer ReportCard, which was introduced last week by E*Assist LLC (eassistllc.com), a New York-based technology service provider to broker-dealers. The ReportCard compliance monitoring tool is available on E*Assist's Advisor work flow platform.
Both the platform and the new compliance tool target small to midsize brokerage and advisory firms. They are designed to assist compliance officers in tracking the advisers under their supervision.
The platform, which is online only and requires no software, runs on Microsoft Internet Explorer, Mozilla Firefox and Apple Safari web browsers.
"When [the Financial Industry Regulatory Authority Inc. of New York and Washington] walks in to audit you, without [having] us, you're going to be requiring a lot of time and labor from your staff," said Ted Tsung, founder and president of E*Assist, referring to the manual process of the archiving and retrieval of compliance materials that is used by most firms.
Mr. Tsung also created the online trading company digiTrade, which he sold to New York-based Thomson Financial in 1998.
ReportCard monitors and captures data about adviser-client interactions that involve a broker-dealer's products or services. It then cross-references the data against preset rule templates maintained by a firm's compliance officer.
If anything pops up as an exception to pre-approved processes, it is flagged. Remaining tasks are monitored, and as they are completed or if deadlines are missed, the system alerts the compliance officer by updating an on-screen dashboard.
Compliance officers also can generate real-time reports whenever they wish to monitor individual advisers or to track particular products or problems.
"We price ReportCard in three ways," Mr. Tsung said.
"First, there's the basic compliance-only ReportCard tool that's $25 per manager per month, plus an additional $10 per month for each rep or adviser they are tracking," he said.
This base package is designed for one-way communication between compliance officers and advisers.
An alternative is a $40-per-user-per-month plan that permits two-way collaboration between a supervisor and the rep.
E*Assist Advisor was created using the Force.com development platform, which constitutes the engine of San Francisco-based Salesforce.com Inc.'s customer relationship management offering and allows third-party developers to create and run their applications en-tirely over the Internet.
As a result of its architecture, E*Assist Advisor is also part of the Salesforce.com AppExchange, meaning that it will work with Salesforce.com CRM as well as any other AppExchange member application. An adviser or firm already that already uses Salesforce as a CRM system can simply purchase and add E*Assist Advisor with no additional customization.
In addition, because E*Assist is an original equipment manufacturer for Salesforce.com, it can sell both its compliance tools and the Salesforce.com CRM product to advisers in a single package for $100 per user per month.
Faith Lee, president of independent broker-dealer Syndicated Capital Inc. in Santa Monica, Calif., said that her firm has been using the E*Assist Advisor platform since the middle of last year for its affiliated representatives and registered investment advisers.
"It provides us with a lot of flexibility in terms of creating our own customized compliance rules, and we really like that it goes through Salesforce," she said.
Mike Simmons, president of Access Financial Group Inc. of Miami, a new independent-contractor firm that manages just under $10 million in assets, said he selected the E*Assist Advisor platform for its ReportCard and because he wanted to use Salesforce as his CRM system.
"Since my main focus now is bringing in assets, it really helps that I can set up a prospect, click a button and know that over 180 days, the client is going to be touched 10 times," he said, referring to the automated reminders built into the product.
The closest direct competitor to E*Assist is ComplianceMax Financial Corp. (compliancemax.com) of San Diego, which markets two compliance packages, Resources and Re-sourcesPlus. Each is available in a version for broker-dealers and for advisers.
The packages consist of a web portal that can be personalized for each firm and acts as an online repository, checklist and dissemination point for a firm's compliance documentation. Other materials, including a monthly newsletter and access to a library of model forms, are included.
ResourcesPlus provides up to one hour of professional compliance consulting, as well as registration and licensing services, including renewals and amendments.
Neither ComplianceMax, which starts at $150 per month per firm, nor ResourcesPlus, which starts at $300 per month per firm, provide the data capture or continuing real-time tracking available with the E*Assist product.
For some sole proprietors, however, either service might be overkill.
"I'm a one-man, planning-only practice with no assets under management, so my compliance tends to be pretty straightforward," said Dylan L. Ross, a certified financial planner with Swan Financial Planning LLC of East Windsor, N.J. Because his firm is small, he is regulated by the New Jersey Bureau of Securities, not the Securities and Exchange Commission.
Nevertheless, Mr. Ross turned to technology for help, buying a web-based e-mail-archiving service from Digital Info Security Co. Inc. (disecurityco.com) of Westminster, Colo. The service captures all his incoming and outgoing e-mail and stores it in write-once, read-many (WORM) format and provides unlimited storage; it also has a comprehensive search feature.
For setup and the first year's subscription, the service costs $370; annual renewal is $300.
"Whatever criteria an examiner can come up with during an audit, I can produce the e-mails in a matter of minutes. It has made my life a whole lot easier," Mr. Ross said.
Competing against Digital Info are Global Relay Communications Inc. (globalrelay.com) of Vancouver, British Columbia; LiveOffice LLC (advisormail.net) of Torrance, Calif., with its AdvisorMail solutions; and Smarsh Inc. (smarsh.com) of Portland, Ore.
Davis Janowski can be reached at firstname.lastname@example.org.