How to Stay Compliant in the Era of CRM2

W W W. M A X I M I Z E R . C O M © 2015 Maximizer Software Inc.

How to Stay Compliant in the Era of CRM2


John EastonDirector, Wealth Management


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Maximizer Services: The Fast Facts


Who We Are• Head office in Vancouver, Canada - 75 staff• Sole focus on Contact Management & CRM since 1987• Offices on 5 continents• 40 business partners in Canada, 400 Worldwide• Helped 100,000’s customers to date

Strong Performer:Mid-Market CRM, SFA, Customer Service

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The Purpose of CRM• Being Organized • Being Compliant • Provide Superior Client Engagement • Prepare for Growth and/or Succession


Staying Out of the Penalty Box: ensuring your financial advisor practice is complaint in

the era of CRM2

• MFDA• IIROC• Federal Gov’t


What’s at stake?

• Fines• Reputational damage• Operating restrictions• Legal action


Current disclosure trends

• Variable at best

• Product recommendations – 75%+• Thorough KYC information – only 32%• Risk – return - ~ 50%• Product fees - ~ 55%• Advisor fees – less than 30%


CRM2 - Disclosure is a Primary issue facing Advisors today

“Research by Investment Executive showed that close to 50% of Canada’s financial advisors say their businesses are to be impacted to an appreciable degree”


Statistics clearly show many Advisors are not ready

• ~ 50% of the asset management respondents say they have not even started to implement the final requirements for compliance with CRM 2

PricewaterhouseCoopers


Canadian Compliance Requirements

• “Know Your Client” (KYC) obligation”

• Adherence to a client’s investment objectives and risk tolerances

• Judging the creditworthiness of the client

• Identifying any industry regulations that will apply to a client account


Canadian Compliance Requirements“KYC is the foundation of best practice and compliance across the industry and provides guidance to both financial advisors themselves and to the courts, where cases hinging on questions surrounding financial advisor liability arise”

Legal liability for financial advisors in Canada, Dolden Wallace Folick LLP, January 2011


KYC Update Requirements• change of account name• address change• new marital or employment status• another person who takes a financial interest in or who gains

control over the account• new trading authorization• a major change in financial circumstances• new investment objectives or risk factors• any amendment to items in the regulatory section (i.e. insider

status)


One Overriding Principle•Duty of care

• deal fairly, honestly and in good faith with clients• observe high standards of ethics and conduct in the

transaction of business• ensure proper disclosure and handling of conflicts of

interest• do not employ prohibited sales practices• supervise activity in client accounts


Proof of Service • Following the regulations correctly• Employing adequate processes and safeguards in acting on client intentions• Securing and recording client permissions and instructions• Apprising clients of deadlines, meeting those• Ensuring client data protection and security


Fact: Using CRM Mitigates Risk

31% of the North American financial advisors surveyed still listed “Paper Notes/Rolodex/Sticky Notes” among their three leading tools for managing customer relationships,

12% enumerated “I keep it all in my head”


CRM Mitigates Risk

Just 20% of the Wealth management practices surveyed by Maximizer in 2014 had a standard automated client onboarding process in place.


How to be Compliant?

• Use your CRM• Automated Processes• Accurate record keeping• Consistent client experiences


Critical Feature Requirements

• Correspondence tracking

• “set it and forget it” capability, meaning you can flag a client address in Outlook and all future communications will be saved on your CRM platform



• Communication and interaction tracking • Conversation notes – categorized• System generated audit notes

• Appointments• Tasks• Actions Plans



• File Management • Client facing documents• Emails



• Industry-specific configurations • Custom fields• Segmentation searches• Dashboards• Action plans



• Mobility


Challenges

• A 2014 survey revealed that as many as 61% of advisers who pay for CRM systems don’t even use them in a most basic and useful way: to capture notes from client conversations – central to compliance audit trails.

• Therefore usability, the right configuration, training and staff buy-in are essential factors to successful compliance through CRM


CRM2

• What is it?

• A new fully-harmonized set of rules being brought in by all the regulatory and self-regulating bodies overseeing the financial advice industry


CRM2

• Why is it being brought in?

• To increase transparency in the reporting of both fees and investment performance


CRM2

• Who is affected by this?

• Financial advisors and firms tied to banks, investment dealers, asset managers, and insurance companies with asset management businesses, plus independents registered with one of the umbrella self-regulation organizations


CRM2

• What is required?

• Clear and complete reports on all charges and compensation to the advisor for all investment products and services provided

• meaningful and accurate reporting of investment performance


CRM2 Timeline

• July 15, 2015 – advisor firms to provide pre-trade disclosure of charges for all securities transactions and report on compensation from debt securities transactions

• December 31, 2015 – firms required to provide enhanced client statements that detail position cost information and market value

• July 15, 2016 – firms must begin delivering annual reports on charges and other compensation, as well as investment performance reports


CRM2 Timeline

“The key for most advisor firms is to build CRM2 compliance into their everyday procedures

and build in the processes and infrastructure to support the implementation and maintenance of CRM2 disclosures at minimal cost.”

CRM2: Ready or Not, PricewaterhouseCoopers, 2015


Using CRM to Address CRM2 Requirements

CRM solutions provides the structure and technology for compiling and distributing reports on fees, compensation and investment performance to clients on an ongoing basis


Using CRM to Address CRM2 Requirements

• Custom fields • Dashboards • Action plans • Conversation notes • Appointments • Tasks • Documents • Audit trails


Custom Fields


Dashboards


Dashboards


Action Plans


Conversation Notes


Appointments


Appointments


Tasks


Tasks


Documents


Audit Trails


Audit Trails


Mobility


Compliance failure is a Risk,

Mitigate Your Risk!


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http://www.maximizer.com/your-industry/wealth-manager-crm

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