The SEC’s probes on financial firms’ record-keeping practices have shifted toward Registered Investment Advisors (RIA). Until recently, the primary targets of the SEC were banks and broker-dealers. Recent reports show that RIA firms also have come under the scrutiny of the SEC.
According to SEC Rule 204-2 of the Investment Advisers Act of 1940 (the Books and Records rule), RIA firms must keep the books and records specified by the SEC, including electronic communications. Also, they must retain these records for at least five years, and in the first two years, they must be kept in a readily accessible place. Rule 206(4)-7 requires RIAs to adopt and implement policies and procedures that address recordkeeping obligations under Rule 204-2.
There can be serious consequences of violating these rules for RIA firms. For example, many large banks, like Morgan Stanley and Goldman Sachs Group Inc, were charged whopping billions of fines for failing to comply with SEC record-keeping requirements. Therefore, it is important for RIA firms to have essential financial advisor software that helps them archive business communications and stay compliant.
Essential financial advisor software for archiving and compliance
- Document management software: This software helps RIAs store, organize, and retrieve important documents, such as client agreements and compliance reports. They provide a centralized system for storing, managing, and tracking electronic documents. They also allow RIA firms to specify access control mechanisms for documents, enhance document security, and provide insights on document usage. Other features like searching, indexing and metadata help organizations to efficiently support e-Discovery requests.
- Email archiving software: As emails are still one of the key mediums of mainstream business communications, it is mandatory to keep records of histories of email communications. This software allows RIA firms to archive and retrieve all email communications with clients in a secure and organized manner. This software includes features like text search, email retention policies, eDiscovery, and legal hold capabilities, which can be important for compliance and regulatory purposes.
- Mobile archiving software: This software helps RIAs archive and retrieve mobile communications. Therefore, they are critical for compliance and regulatory purposes. Modern mobile archiving solutions can monitor, capture, and retain business-related communications from popular instant messaging apps like WhatsApp, Telegram, and iMessage. They also offer essential archiving features like secure and centralized storage, backup and restoration of important text messages, photos, videos, etc., data encryption, de-duplication, and compression to optimize storage space and improve data security.
- Cybersecurity software: RIA firms are governed by various data security compliance regulations. Cybersecurity includes anti-virus software, Network Security Monitoring tools, Firewalls, Encryption Tools, and many more. This software provides the necessary defense mechanisms for protecting sensitive client information, ensuring that RIAs’ systems are secure from hacking and other cyber threats and compliant with data security compliance regulations.
- CRM software: This software helps RIAs manage client relationships, track client interactions, and store important client information, such as account balances and investment strategies. Typical features like sales and marketing automation, customer service tools, and contact management help businesses to improve customer satisfaction and loyalty. Mobile and email archiving systems can be integrated into CRM solutions and improve compliance processes.
- RIA Portfolio management software: This software helps RIAs manage and monitor their clients’ investment portfolios. It helps firms to track investments, generate reports, analyze performance, and make informed investment decisions. This software also integrates with brokerage accounts and compliance management software.
What to look for in RIA Software tools for Archiving and Compliance?
The best RIA software tools you choose must include the following features.
- Support for emerging communication platforms – As communication platforms are evolving and new platforms and methods keep emerging, RIA firms must ensure their archiving and compliance tools can accommodate those changes. For example, the trend nowadays is using modern social media platforms such as WhatsApp, WeChat, Telegram, iMessage, and Signal for business communications. Therefore, it should have support for archiving communications from such RIA technology platforms.
- Easy onboarding experience – Customers always prefer software that is easy to learn and integrate into their experiences. Complex onboarding processes can cause to loss of customer bases. Therefore, choose software with a simple onboarding process that allows customers with little or no technical knowledge to easily onboard into their platforms.
- The high-performance search experience – When it comes to supporting eDiscovery and litigation requests, search capabilities are critical. Searching through a vast amount of records can take significant time and costs. Therefore, check if the software contains enhanced and efficient search functionalities to easily find the records of customer communications in which compliance officers are interested. Also, filtering capabilities are critical to narrow the search criteria by filtering out unnecessary parts.
- Reporting, monitoring, and audit capabilities – Reporting and monitoring capabilities allow firms to monitor customer communications in real time and enable warnings and alerts whenever non-compliant communications are detected.
- Secure and easily accessible storage – Data security is of utmost importance for archiving and compliance tools as you are generating a vast amount of data that could be susceptible to cyber-attacks. According to SEC rules, data must be kept in easily accessible storage within the first two years so that compliance officers can quickly find the data they want.
How LeapXpert help RIAs to stay compliant?
LeapXpert offers registered investment advisor companies a modern, high-quality, and compliant mobile archiving solution. Its federated architecture integrates with many instant messaging apps enabling organizations to carry out secure and compliant remote mobile communication supporting iPhones.
Our new RIA solution enables you to easily archive client conversations driven through messaging apps like WhatsApp, iMessage, etc., SMS, and email and stay compliant with investment advisor compliance regulations. It is a fast and flexible SaaS solution developed with RIAs and their needs in mind. It is easy to enroll, has no obligation on a minimum number of seats, and onboarding only takes minutes. When all messages are archived with the LeapXpert messaging solution, RIA firms can reap the benefits of compliant mobile messaging with their clients.
SUBSCRIBE TO OUR NEWSLETTER
Useful tips and helpful information.
You can unsubscribe at any time - obviously!