800-646-0700         LOG IN        CONTACT US        FREE TRIAL
Cloud Technology Blog for RIAs and Broker-Dealers

SEC’s 2017 Examination Priorities Reinforce the Advantages of a Turnkey IT Solution

3/28/17 11:00 AM / by Justin Kapahi

Magnifying glass showing compliance word on grey background.jpeg

The SEC’s Office of Compliance Inspections and Examinations (OCIE) recently released its national examination priorities for 2017.

While reviewing the regulator’s examination initiatives to protect investors—and the overall integrity of the U.S. capital markets—as the investment landscape continues to become more complex, we uncovered several SEC priorities that underscore the benefits of a turnkey approach to IT and cybersecurity.

“Never-Before Examined Investment Advisers: We are expanding our Never-Before Examined Adviser initiative to include focused, risk-based examinations of newly registered advisers as well as of selected advisers that have been registered for a longer period but have never been examined by OCIE.” 

Unfortunately, many smaller and startup financial firms think they can get away with weak cybersecurity and IT protocols because their status as “small” or “new” makes them less likely to be targeted by cyber-criminals.  Think again!

Cybercrime is a $400 billion per year industry—earning more than stolen credit cards and cars combined—and financial companies are targeted by cyber-criminals 300 times more frequently than firms in other sectors. Any firm that manages people’s money is a potential target for cybercriminals, so regardless of how many years you’ve been in business or the amount of assets you manage, you need to be prepared.

The fact that the SEC is expanding its “Never-Before Examined Investment Adviser” initiative this year is another indication that young firms need to have state-of-the-art cybersecurity solutions, as well as IT systems and protocols, in place to satisfy regulators that the client assets they manage are safe.

Smaller and younger firms that lack the financial resources, and in-house technical staff, to implement the necessary cybersecurity measures and IT systems and processes may find it easier to utilize a turnkey IT solution in which compliance and cybersecurity features are built into the software.

Our workplace wealth_ offering is one such turnkey solution. We designed workplace wealth_ to consolidate all of a financial firm’s applications and data in a single digital hub. This IT centralization helps streamline and automate company workflows so financial services professionals can spend more time servicing their clients instead of tending to IT matters.

“Multi-Branch Advisers: We will continue to focus on registered investment advisers that provide advisory services from multiple locations. The use of a branch office model can pose unique risks and challenges to advisers, particularly in the design and implementation of a compliance program and the oversight of advisory services provided at branch offices.”

Legacy technology systems have historically required RIAs, broker-dealers and other financial services firms to undertake complicated processes in order to properly align their branch offices with their main corporate networks, as well as properly secure their branch offices’ technology platforms. Access, visibility, control and security have been difficult to manage without a commitment to resources at the local and corporate level.

By consolidating all of a financial firm’s applications and data in a central digital hub, workplace wealth_ allows all employees, whether they work in the headquarters or in a branch office, to easily access all programs and client information from any device in any location. In other words, we remove any multiple-branch IT and cybersecurity difficulties entirely.

"Cybersecurity: In 2017, we will continue our initiative to examine for cybersecurity compliance procedures and controls, including testing the implementation of those procedures and controls.”

Cybersecurity remains a top priority for the SEC this year, but the word “testing” here is important for understanding what the SEC will be looking for in cybersecurity examinations going forward. Many wealth management firms possess the technology they need to be secure, but fall short when it comes to creating the necessary software configurations to enforce their cybersecurity policies.

Here again is why a turnkey IT solution like workplace wealth_ can help financial services firms ensure they always remain up-to-date in the areas of cybersecurity and compliance. We help manage these for each RIA and broker-dealer we partner with, so they can focus on what they do best—helping their clients reach their long-term financial goals.  And since cybersecurity and compliance features are built into workplace wealth_, it’s easy for us to roll out updates to these features as new cyber-threats and regulations emerge. 

More information about workplace wealth_, or to schedule a demo or start a free trial, visit http://info.externalit.com/workplacewealth.

Topics: Cloud Desktop, Cybersecurity, Compliance

Justin Kapahi

Written by Justin Kapahi

Justin Kapahi is VP, Solutions & Security for External IT. He has over 15 years of experience in technology & finance and is the former CTO of Fairholme Capital Management.