Taking Stock of FINRA’s 2018 Operational Priorities

August 2, 2018 | ARTICLE | BY KELLY LYNCH

In its January 2018 Regulatory and Examination Priorities Letter, FINRA outlined several areas of focus for 2018. Now that we’re halfway through the year, many firms are taking stock of where they’re at with each of the relevant priorities.

At Envision, we’re also taking stock—looking at how FundKeeper can help independent broker dealers meet operational challenges related to mutual fund processing. FundKeeper operates like a traditional brokerage platform but without the complexity and investor level trading fees.  It provides comprehensive, centralized shareholder servicing on a single platform—an alternative to conventional brokerage or going “direct” to the mutual fund company.

Here’s our rundown of key FINRA priorities for 2018 that FundKeeper addresses:

Operational and Financial Risks

Disaster Recovery and Business Continuity Planning

The FundKeeper delivery model simplifies your business continuity planning as mutual fund processing is centralized in one place and administered by U.S. Bancorp Fund Services. The mission critical software, hardware and other required infrastructure are maintained in a high-availability primary data center with the disaster recovery data center continuously updated to mitigate data loss.  The application and infrastructure have 24/7/365 monitoring and support.

Customer Protection and Verification of Assets and Liabilities

As FINRA states in its letter, the protection of customer assets and the accuracy of firms’ financial data are always priorities in FINRA examinations. FundKeeper consolidates and houses customer mutual fund information in one place versus across multiple fund families. It also has one set of fund data, ensuring consistency across all investor accounts.

Further, FundKeeper’s use of a private cloud platform limits who can access the core customer data to a small set of users permitted to do so.

 Technology Governance

FundKeeper streamlines the technical change control environment to mitigate operational breakdowns due to technology revisions. Again, the one “golden” copy of customer and fund data helps to ensure accuracy.

Cybersecurity

Because FundKeeper is a single, centralized platform, firms have fewer “pipes” to worry about securing. Customer data is stored in a private FundKeeper cloud which is backed by FundKeeper’s hosting partner, Integrated Systems Corp.  The FundKeeper cloud is continuously monitored for intrusion and has implemented the latest technology for securing data.  The infrastructure undergoes vulnerability assessments and penetration tests to identify any potential areas of exposure.

Market Integrity

Best Execution

FundKeeper could represent a better execution model than either direct-at-fund or traditional brokerage. We’ve written previously on the topic of best execution for mutual funds, which is increasingly important to ensure investors are not paying undue costs that need to be factored into determining the best execution for a trade.

Sales Practice Risks

 Compliance

FundKeeper helps streamline the compliance and review process with the ability to monitor and review information in real time. Firms can automate upfront compliance tasks such as suitability review and the records around compliance and suitability review notes. With FundKeeper, firms can also easily control the fund lineup.

Conclusion

Our goal in creating FundKeeper was to provide independent broker dealers and other intermediaries with a more efficient and compliant platform for processing mutual fund accounts. We believe the FundKeeper model meets many of the compliance and operational objectives that both financial intermediaries and regulators are looking to achieve.