WealthManagement | 5/10/2017 | Michael Pinsker
Efficiency is one key to maintaining good business relationships in the financial world. No one wants to wait around while your company fixes an error, which is why transactions that are “not in good order,” or NIGO, are such a pain. Addressing the underlying issues within a NIGO wastes an enormous amount of time, but straight-through processing systems enable financial advisory firms to complete and process important transactions quickly while dramatically cutting NIGO designations altogether.
That said, not all straight-through processing solutions push documents straight through at all. The following are a few tips to ensure that your firm’s technology system(s) actually enable the straight-through processing of documents while complying with various SEC and FINRA regulations.
Combine Straight-Through Processing with Compliance Oversight
Due to the high-stakes nature of finance, many regulatory rules specify what employees can and cannot do when it comes to electronic records. In fact, FINRA has extremely specific requirements when it comes to completing electronic forms. Companies that willfully or unknowingly break these rules can face steep fines and irreversible damage to their reputations.
At the beginning of this year, FINRA announced in its 2017 regulatory and examination priorities letter that it had enhanced its risk-based surveillance and examination programs, and would initiate “electronic offsite reviews” to supplement its onsite examinations over the next 12 months.
This is why your firm’s straight-through processing system should also be equipped with compliance oversight services, which can help your employees avoid costly regulatory violations while processing documents — as well as meet evolving FINRA and SEC requirements.
Harness Straight-Through Processing to Manage Risk Across Your Organization
FINRA’s 2017 regulatory and examination priorities letter highlighted financial risk management as a focus of its examination teams going forward. When evaluating financial services firms, FINRA will assess a variety of areas related to risk management practices, including risk metrics and triggers, communication plans, and contingencies, as well as how frequently and effectively parties responsible for monitoring and controlling risk communicate with each other.
When choosing a straight-through processing solution, make sure the technology provider is willing to work with your firm to help streamline workflows and manage risk across your entire organization, as opposed to only in the area of document management.
Find a Solution with a Built-In Electronic Signature Tool
Since June 30, 2000, the Electronic Signatures in Global and National Commerce Act has given digital signatures the same status as physical ones. While many companies have since created their own tools to enable this technology, if an electronic signature tool isn’t built into your straight-through processing system, there’s a good chance that you could encounter a problem related to technology integrations.
When you have an electronic signature tool built into such a solution, you reduce the risk of an integration impasse preventing e-signatures from being imported into an application. If anything does go wrong, you only have one company to contact to solve your dilemma. Additionally, by having the electronic signature process built in, you possess the required compliance oversight and audit tracking for the full lifecycle of each transaction.
Data Validations Catch Form Errors Before They Become NIGOs
One of the most common mistakes that result in a NIGO designation is incorrect information. All it takes is a single error for the entire form to be invalidated, resulting in wasted time and a delay while the issue is resolved.
For example, it would be very easy for an advisor to accidentally enter “June 8, 19882” as someone’s birthday, which can throw off an entire form or series of forms. Fortunately, the better straight-through processing systems are equipped with data validation tools to catch these types of errors before they are processed and cause a NIGO designation.
Making the Right Choice
At the end of the day, straight-through processing solutions should generate convenience and efficiency across your organization. The above tips can help you choose a straight-through processing provider that not only reduces NIGO designations, but enables you and your team to work smarter and faster on all aspects of your business.
Michael Pinsker is CEO and President of Docupace Technologies.
Docupace Technologies, LLC pioneered and implemented SEC/FINRA-compliant Straight-through Processing technology for financial services companies. Docupace’s cybersecurity and document management and workflow solutions simplify the process of capturing, organizing, routing and accessing information for broker-dealers and registered investment advisors (RIAs) that, under new government regulations, must keep thorough, secure records of documents that explain how they formulated recommendations that are in the best interests of investors. Docupace’s innovative products have been proven to significantly reduce not-in-good-order (NIGO) conditions on document processing submissions for financial services companies.
Docupace currently services over 1 billion stored documents from more than 500 Broker Dealers and RIAs. For more information, please follow @docupace.