Sheryl Rowling dishes on how technology helped her firm managed through a recent examination by the Securities and Exchange Commission. It made a difference.
My firm recently went through a Securities and Exchange Commission examination. Although an exam is never fun, looking back, I realize that technology made a real difference.
Technology benefits our operations, making us more efficient, bringing consistency and reducing errors. These benefits proved to be an advantage during the audit. We were able to produce requested documentation quickly and the documentation helped show continual, high quality work on behalf of our clients.
I will briefly describe the technology that addressed the areas on which the examiners focused:
Accurate values: Portfolio accounting software (in our case, PortfolioCenter) combined with ByAllAccounts enabled us to demonstrate accurate values and reconciliations.
Showing consistent management: Re-balancing software allows advisers to stay on top of their clients' accounts on a continuous basis. In fact, the auditors were so impressed by Total Rebalance Expert, they asked for a demonstration.
Correct reporting and appropriate returns: The examiners were concerned with same-model portfolios experiencing outlying returns. Because we use Report Check, we were able to produce our quarterly review reports. For portfolios with inconsistent returns, we had already identified specific (acceptable) reasons, such as unmanaged positions or a midquarter cash infusion.
Reliable record keeping: The examiners asked us to produce all records during a period of time for certain clients. After providing them with a four-inch stack for the first client, they asked for the document listing from Junxure (our CRM). With that, they simply highlighted a few items for each client, making our job (and theirs) much easier.
Archiving and compliance: Our use of Global Relay enables the archiving of all emails, instant messages and LinkedIn content. Additionally, it provides the basis for reviews of employees' communications by identifying items based on keywords (for example, fraud or secret) and random selection. With monthly reports of the items identified with the follow-up review, the auditors were quickly satisfied on this requirement.
The cost of all of these programs is less than 1/100th of 1% of our assets under management. The value of getting through an SEC exam in a couple of days: priceless.
What do you think? What kinds of technology have helped you manage through a regulator's audit? Or what do you wish you had when the examiner or auditor came knocking?
Sheryl Rowling is chief executive of Total Rebalance Expert and principal at Rowling & Associates. She considers herself a non-techie user of technology.
