• “Fool-Proof” Manual Entry. Chances are this is what your firm is doing already. Can your standards be raised and the review process enhanced to make this traditional spread sheet approach fool proof? If “yes,” the addition of staff and greater administrative controls will be needed to overcome the drawbacks of manual spreadsheets. Otherwise, tracking non-cash compensation will yield to the error-prone downside of manual entry: a time-consuming, key-punching line of attack that puts the broker-dealer or wealth manger squarely in the middle of a tug-of-war between asset management event allocations with each advisor’s record of those events.
• Hybrid: Manual Entry With Reporting Software This method is faster. However, the lack of standardization between the software you employ and what product vendors and asset managers are using can be a significant drawback. Using software as a kind of band-aid in this manner can even prove incompatible with your own firm’s existing business ecosystem.
• Digital Portal Solution In this model, your firm, advisors and your product vendor and asset manager partners would all have automated reporting capabilities. This allows for the ability to reconcile workflow and reporting in a timely manner. Dropdown menus that facilitate event entry and reconciliation would also simplify workflow and reporting while streamlining product delivery to clients in a transparent way that’s fully compliant with conflict-averse Reg BI requirements.
A Powerful Tool For Client Service during A Time Of Crisis
As the need explodes for financial advisors to increase their services—and emotional support—to clients during the current period of volatility, the importance of non-cash compensation in the professional development and education of advisors grows as well.
Sponsored events from asset managers offer advisors a critical means to broaden their understanding of economic trends and portfolio construction themes.
Through the benefits of transparent, online tracking and reconciliation, broker-dealer compliance officers can sleep better at night, too. By referencing the establishment of non-cash compensation solution in their own Reg BI policies and procedures, broker-dealers and wealth managers also gain a shot at seizing the regulatory high ground. As Reg BI rolls out this summer, they’ll have a chance to outshine their slower-to-adopt peers—with their error-prone ways.
Dan Mezaros is product manager of non-cash compensation at Broadridge.