Preserving Paper Trails: Advisors & Fintech Part 3

Preserving Paper Trails: Advisors & Fintech Part 3

Archiving/compliance tools help corral a firm's mountain of paperwork.

Reviewed by: Debbie Carlson
Edited by: Debbie Carlson

[This article appears in the February 2016 issue of ETF Report. This is the third of a five-part series: Building Better Portfolios; Tools For Strong Messaging]

Running an advisory service means a lot of paperwork—whether it’s client communication, trades, emails, research, social media—the list is nearly endless. And considering that regulatory requirements mandate pristine paper trails, proper archiving is critical.

For email, Mike Forker, chief compliance officer for CLS Investments, part of NorthStar Financial Services Group, says his firm uses Global Relay, which offers compliance archiving and monitoring, and integrates with Microsoft’s Outlook email system.

“From my perspective, the best part about it is the search capability,” he said. “It has a pretty robust archiving system that allows us to search in a number of different ways, so it makes it easy to find emails even if you don’t know exactly what to look for.”

No Need For Scanning Dept
Document storage can take up huge amounts of file space, and keeping the integrity of these documents is important. Forker said Laserfiche is a “WORM” [write once, read many] compliance system for data storage, meaning documents cannot be edited once entered. Using Laserfiche helped CLS Investments save money and time by eliminating the need for a scanning department, he notes.

Prior to using Laserfiche, CLS Investments managed documents by using FileNet. Similar to Laserfiche, FileNet combines enterprise content, security and storage with workflow and process management capabilities. Forker says they switched to Laserfiche because it integrates with their back-office systems.

Dave Huffman, president and founder of the Huffman Financial Group, says he exclusively uses Advisors Assistant for his customer relationship management software, but also likes its archiving capability.

All In One Place For Compliance
“It helps me keep really good notes, and it has helped me become a lot more compliant because everything is in the clients’ files. When my compliance department comes in to do my audit … I always get a perfect inspection. They ask for a file, I’ve got it within 30 seconds,” he said.

David Garff, chief executive officer and chief investment officer for California-based Accuvest Global Advisors, says Datto is the hardware and cloud-based system they use as a backup server. Datto backs up all work several times daily, and if the firm has a problem, whether a server issue or power loss, they can spin up a virtual server with all of the information on it in 15 minutes, letting work proceed as normal, he notes.

For social media compliance, Forker said CLS Investments uses Social Assurance, which integrates with the company’s social media sites including its Facebook and LinkedIn pages, and the firm’s Twitter account.

Archiving Social Media
Social Assurance has a workflow built in, so whenever someone at CLS wants to post to social media, all of those posts are immediately routed to compliance for approval. Those posts are also archived, and it records any changes to social media posts.

And if by some chance a social media post gets around compliance, it will send an alert, Forker adds. In addition to monitoring and holding internal postings for compliance approval, the software can monitor what is said about CLS Investments.

“So if someone mentions us on Twitter, we get a notification; or if someone writes a Facebook post about us, we get a mention,” he said.


Fintech Tools

David Garff is chief executive officer and chief investment officer for California-based Accuvest Global Advisors. The firm advises high net worth families and institutions, and uses country-specific ETF investment strategies institutionally in the U.S.; it also works with advisors to help them navigate international markets. Accuvest uses Smarsh to archive email.

What’s your favorite archiving or compliance tool?
Smarsh. It’s an email and instant messaging archive. It allows our compliance folks to do keyword searches; it puts all of our emails into a non-editable, not-changeable framework. So if someone was involved in some bad acting, they couldn’t go back and erase that off the exchange server. It’s a third-party service that allows us to stay where we should be.

How else do you use Smarsh?
It’s part of our policies and procedures that we do forensic testing on emails and sampling. It’s also an archive for our head trader’s instant messaging. Any instant messages that our head trader writes are saved and archived as it relates to trades.

How does it help you on the regulatory side of the business?
If you’re going to deal with the Federal Communications Commission, it wants to know what protocols you have in place for work, and what protocols you have in place to avoid mischief—whether it’s trader mischief in particular or email mischief.

We can say, ‘We’re using an archive system and audit system that allows us to capture everything and search everything and do multiple keyword searches in a single stroke,’ but it also makes it so no one can create any revisionist history.

What did you do before you started using Smarsh?
Before Smarsh, we could save the instant messages, but being able to go through them and save them, to do keyword searches, anything like that [wasn’t easy]. Plus if [our head trader] decided at some point he wanted to get rid of the archive, he could; it was under his control. [With Smarsh,] it’s no longer under his control, or anyone’s control, except for our chief compliance officer, and even he can’t go in there and edit the data. He can only look at it. It’s an archive flow.

As an example, in our accounting system and portfolio management system, there is a log. It archives every single action you take in the software in an uneditable format. If I put a trade in at X price in the books and I reverse it and change the price, I can see the audit trail along the way. No one can change that.

This is a much more efficient system than what you were doing before, then?
We would do backups on a regular basis, but we would have to combine them all in to a specific file. There would be different files for different people, and then we would have to store all. It was just very clunky. [Smarsh] is not cheap, but there’s a trade-off on time saved.

Debbie Carlson focuses on investing and the advisor space for U.S. News. She is an internationally published journalist with bylines in publications including Barron's, Chicago Tribune, The Guardian, Financial Advisor, ETF Report, MarketWatch, Reuters, The Wall Street Journal and others.