2022 started off with a bang when Docupace held its first webinar of the year featuring Risk Management & Trade Surveillance, delivered by Executive VP and General Manager of jaccomo at Docupace, Robert McGill. Acquired by Docupace in May 2021, jaccomo brought its expertise in compliance, data integration, advisor compensation, and financial reporting into Docupace’s back office automation and workflow platform.
Here are some of the highlights that came out of this presentation. You can access the replay here.
The Current State of Risk Management in Wealth Management
McGill began with a brief overview of the risk management-specific challenges facing firms in 2022. The first is the diffusion of data across many industry brokers, trade software, and other disparate entities that collect and store financial transactions. Similarly, many existing risk management systems generate thousands of “false positive” alerts that take excess time and manpower to sort through on a consistent basis.
Additionally, many wealth management organizations struggle with identifying trade issues when they are still pending finalization. Catching risks only once they have passed into finalized trade-land creates unnecessary hurdles and red tape that could be avoided if the problem had been caught earlier.
In short, McGill emphasized how risk management, like many other common business procedures, is first and foremost a process that can create headaches and bureaucratic hold-ups like any other. However, the underlying importance of mitigating trade risk and catching fraud attempts places pressure on firms to get this particular process right. McGill’s solution relies on a mixture of smart alert processing, automated data tracking, and industry-recognized best practices, all conveniently wrapped up in a software solution platform
Customizing Risk Management/Trade Surveillance Alerts
Alert types offer risk management experts more nuance when it comes to identifying and responding to threats. McGill points out that accurately judging the level of risk involved with each alert helps advisors better determine appropriate remediation steps. Categorizing alerts into types allows firms to better identify patterns that indicate fraud or problematic trading behavior. McGill, and by extension Docupace, offer a variety of alert types that can be customized to specific business needs. Currently, McGill’s software offers 45 different types of alerts with more in the immediate development pipeline.
A particular strength of Docupace’s alert strategy is the extent to which it can be customized. Firms can vary risk factors and fine tune their alerts to ensure that the right threats get routed to the right people in the organization. Proper alert optimization saves time and allows firms to focus on the risks that merit actual investigation rather than wade through hundreds of disorganized system warnings.
Automating and Optimizing Remediation
Once they identify and categorize alerts, organizations can move into the remediation and documentation process. McGill has some pointers on this phase of risk management, too. Depending on regulatory requirements and individual firm preferences, the remediation process can range from quickly putting notes into the system to more complex investigations and paper-trail documentation procedures. Specific alerts with color codes allowing managers to complete the appropriate remedial steps allow for easier sorting and faster completion of open claims.
McGill detailed a specific functionality that allows his system to pull information from large databases of existing trades. Automated workflows that pull trade data into the risk management system cut down on manual paperwork and keep records-of-truth stored on the software for years. Changing federal regulations mean that wealth management firms are always adapting to new rules in an ever-shifting risk environment. Documentation able to withstand regulatory scrutiny is key to ensuring smooth trades and fulfilling overall customer needs – two business focuses that benefit when remediation is as automated and thorough as possible.
Building on Best Practices
The final highlight of McGill’s webinar focuses on his company’s gradual development of best practice recommendations that accompany new software installs. Although the platform allows for extreme alert customization, McGill and his team found most clients were interested in a set of fairly common issues. When users sign up with Docupace, they now automatically get access to a series of best practices and standard rules based on intent and carefully collected insights from previous customers.
Best practices allow firms to start with a baseline recommendation that can be further customized as their needs change over time. As more individual organizational information gets collected, Docupace experts can further optimize processes to best fit what they see in the data. As McGill points out, “If everything has risks, then nothing is elevated risk.” Each organization needs to strike a fine balance between industry-standard practices and unique customizations that address their needs.
Overall, McGill offers valuable insight into the future of risk management in the finance space. As a member of a leading software solution for risk management, McGill continues to push boundaries and encourage innovation within his field. For McGill and Docupace as a whole, the future is bright, and risk management will continue to become a more automated, customizable process for monitoring the financial trading sector for years to come.
Ryan George is the Chief Marketing Officer at Docupace. He is responsible for the company’s brand awareness, early-stage sales pipeline, content strategies, customer and industry insights, internal and external communications, design, and events. George actively engages in leadership roles in both the financial services and marketing communications communities. He a member of the Forbes Communications Council, an invitation-only, fee-based organization of senior-level communications and public relations executives, the CMO Council and the CMO Club.
