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How to Reduce Enterprise Risk for Account Opening and Trade Reviews

Suzanne Bohs, March 2, 2021

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Registered principals of financial institutions hold a very important job in the financial industry: oversee the two processes of account opening and trade approval.

Broker-dealers open hundreds of accounts each day, processing thousands of trades. The manual approval of account openings and trades can lead to increased risk of missing key issues as well as the practice’s inefficiency. As representatives of their firms, registered principals are legally liable for any oversight problems that occur. And events like bringing on a new large office or quarterly/year-end trading can lead to backups which firms could never recover from without engaging additional resources.

What’s the solution to this operational challenge?
When you have the ability to automate the principal approval of both of these workflows, allowing for straight-through processing, this not only reduces risk but also optimizes your processes and practices so your team can focus on the outlier tasks that matter. At Advisor360°, we have an experienced team which focuses on the tools dedicated to scaling and improving the efficiency of home office functions like automating routine workflows. This means employees can focus on more critical functions like working with their advisors to help them grow and scale their business.

So how does the Advisor360° platform not only reduce compliance risk but also make principal approvals more efficient?

For principal approval of accounts:

  • Any new accounts established, or any changes made to the suitability information of existing accounts, run through a set of rules defined by your firm.
  • Rules can be based off several different criteria like investment objective, age, time horizon, or any other data collected.
  • Accounts that fall within specific parameters flow through the system and can be either placed in queue for a final review or automatically approved, annotated, and stored as 17a-4 compliant.
  • The small percentage of items that trigger an exception are pushed out of the queue and routed to a principal for further review.

For principal approval of trades:

  • All trades sent to the custodian for execution run through a set of rules defined by the firm.
  • Rules can be based off several different criteria like investment objective, time horizon, company, and/or security type.
  • Trades that fall within set parameters are automatically approved, annotated, and stored as 17a-4 compliant.
  • For those trades that trigger an exception, they are routed to a principal for further review with the advisor (including where notes can be logged for the action taken).

Automation is centered around efficiency and productivity, so we give our clients total control of the automated processes. They can configure our platform with specific rules to fit both the firm’s needs and the needs of advisors. The foundational key to this is our Unified Data Fabric™ which integrates all the compliance data required to achieve your principal approvals seamlessly in one holistic user experience.

With Advisor360°, your firm can improve the efficiency of current workflows by reducing costs from the time employees spend on routine tasks, creating more straight-through processing, and enabling employees to focus on the riskier items—so they can dedicate more time to helping their advisors.

Suzanne Bohs is a Director of Product Strategy at Advisor360°, overseeing the Home Office Experience teams, a dedicated group of people that help our enterprise clients become even more efficient, productive, and compliant.