Secure Digital Vault Technology - What is a Digital Vault - FutureVault

What is a Digital Vault? A Guide to Digital Vault Technology 

Digital Vaults have become a fundamental component in the modern technology stack within financial services and wealth management, moving away from a “nice-to-have” to an absolute must-have piece of technology to safeguard, manage, and handle sensitive enterprise, advisor, and client documentation. 

When the right Digital Vault technology is implemented, these platforms can materially transform the way firms organize, manage, store, and deliver client-facing documents; onboard and retain clients; attract talent and elite advisors; manage compliance and audit readiness; and provide advisors with a competitive edge to materially improve the engagement and relationship they have with new and existing clients—and their families. 

This guide provides an overview of all things Digital Vault technology and importantly, answers common questions including, “What is a Digital Vault?”, “Who are Digital Vaults for?”, and even “What are the benefits of using a Digital Vault?”.  

Table of Contents 

1. What is a Digital Vault? An Introduction to Digital Vaults 
2. How Does a Digital Vault Work? 
3. Are Digital Vaults Safe and Secure? 
4. Why Digital Vaults Matter in Financial Services 
5. Who are Digital Vaults for? 
6. What Types of Documents Should Go in a Digital Vault? 
7. Not All Digital Vaults are Created Equal 
8. Conclusion 
9. FAQs 

What is a Digital Vault? An Introduction to Digital Vaults 

A Digital Vault is an online security vault; it is the virtual equivalent of a safety deposit box to store and safeguard critical documents, data, and information. Much like a physical vault is used to store and protect valuable physical assets, such as money, banknotes and certificates, jewelry, physical documentation, and more, a Digital Vault is used to safeguard important and valuable digital assets; namely files and documentation. 

For individuals — those who are often clients of financial services and wealth management firms — Digital Vaults provide an additional level of confidence in knowing that personal data and information is kept safe and secure. 

Common documents and items included within a Digital Vault are financial statements (those delivered from institutions to clients), banking and account information, financial and estate plans including Wills and Trusts, legal information, insurance policies, real estate and mortgage-related documentation, personal identification such as Driver’s Licenses and Passports, and more. 

While Digital Vault technology provides operational, administrative, and compliance benefits at the enterprise and front-office level, they serve to provide value for clients via managing their personal life’s content securely and efficiently, at their fingertips. 

“Digital Vault platforms are becoming the next iteration and the future of secure document management by providing firms (and their advisors) accountability, efficiency, structure, compliance, and protection—all areas that enable organizations to scale document management practices across the many levels of their organization, and most importantly, to extend and enhance the value proposition delivered to their clients.” 

Kristian Borghesan, CMO at FutureVault 

How Does a Digital Vault Work? 

A Digital Vault keeps information and documents organized in one centralized location, ultimately serving as the secure single source of truth, and making information and documents accessible anytime, anywhere.  

Digital Vault platforms are much more than simple document storage repositories; individuals, financial advisors, and enterprise administrators can share files with different parties from one central location and provision different roles and levels of access when and where needed.  

More advanced and leading Digital Vault solutions like FutureVault are known for robust document exchange functionality, scalable structuring of folders and files, advanced permissions, along with automation capabilities to deliver and upload important information and documents from a variety of sources (custodians, planning software, CRMs, etc). 

Are Digital Vaults Safe and Secure? 

Digital Vaults have grown in significance and popularity, especially within financial services, largely due to their modern and best-in-class security measures along with top-tiered Vault solutions meeting regulatory requirements for data privacy to safeguard enterprise and client documentation.  

A Digital Vault is much more than a secure storage solution for your important documents; it is a robust platform for secure document handling to facilitate document exchanges taking place between multiple parties, in one centralized environment. Digital Vaults provide a safe environment for storing critical documents such as agreements and account information, investment statements, estate plans, and personal records. 

Most Digital Vault solutions reside in the cloud and leverage all the benefits of data availability, redundancy, and low storage costs. More importantly though, Digital Vault platforms, and notably the FutureVault platform, leverage institutional-grade security with modern encryption (in transit and at-rest) to confidently protect those documents, data, and digital assets within a secure environment. 

If your institution and firm is assessing a Digital Vault solution, look for those that actively maintain certifications such as SOC 2 Type II compliance, demonstrating their commitment to preserving and protecting enterprise and client documentation.  

Why Digital Vaults Matter in Financial Services 

As the amount of sensitive information, data, and documentation that institutions, firms, advisors, and/or clients deal with daily continues to multiply along with the growing reliance on secure document handling processes (and tools) for both operational and compliance purposes, the role of a Digital Vault is quickly becoming one of the most important pieces of technology for modern firms, institutions, professionals, and their clients.  

Digital Vaults have become an unequivocal must-have technology, equipping institutions, firms, and professionals with structure, security, and efficiency to streamline and automate document-driven processes and deliver tremendous value to clients. 

Digital Vaults are ‘central’ to all things data, information, and documentation that span across the enterprise, advisor, and client relations. In many cases, Digital Vaults have proven to be the linchpin for advisors and firms looking to navigate the intricacies of estate, legacy, succession, and wealth transfer planning. 

Notably, Digital Vaults solve many of the legacy and traditional document management and document handling challenges by providing robust functionality that goes well beyond simple document storage and management. 

1. Digital Vaults Provide Structural Brilliance 

Digital Vaults provide structure and organization that allows institutions and firms to handle large volumes of data and documents that span across the different levels and stakeholders of the organization, while importantly provision secure access to client documentation when and where needed, at scale.  

Solutions like FutureVault make it easy to standardize folder structures and file management templates for the enterprise, for the front office, while also allowing for different folder and file structure templates to be created and managed for different client segments (estate planning client, insurance-only client, high net worth clients, ultra-high net worth clients, etc.).  

FutureVault’s multi-tiered Digital Vault is purpose-built for all levels of an organization and for every stakeholder – this allows for secure access to information, where delegated and provisioned, by home office and back-office teams, by advisors and front office teams, and by clients and family members.  

2. Digital Vaults Enhance Security and Compliance  

Information security and compliance are table stakes for top-tiered Digital Vault solutions. By employing cybersecurity best practices, institutional-grade security, advanced and modern encryption protocols (in transit and at-rest), and multi-factor authentication, Digital Vault solutions like FutureVault help ensure that sensitive data remains safeguarded from unauthorized access. 

With respect to regulation, it’s important that the Digital Vault your institution and firm moves forward with adheres to and meets data residency, data redundancy, disaster recovery, and document retention requirements set forth by regulatory bodies, including FINRA and the SEC (such as SEC Rule 17a4).  

3. Digital Vaults Lead to Operational Efficiency Gains 

Paperwork and document handling are a necessary evil for financial services and wealth management firms. Documents are tightly tied to many internal and external processes that often involve accessing, requesting, sharing, and managing a wide array of different types of information and documents.  

Digital Vault solutions provide efficiency by improving document-driven workflow, ultimately freeing up professional time and capacity, saving money, and building trust with clients. 

Common use cases include automating the delivery of statements to advisors and clients; eliminating the back-and-forth manual exchanges and non-compliant file-sharing methods; standardizing the document collection process; streamlining onboarding processes, providing trusted collaborators and third parties with secure access to key portions within vaults to streamline workflow. 

4. Digital Vaults Elevate Advisor and Client Experiences 

The digital experience for Advisors and clients is more important now than ever and having the right set of digital tools in place is becoming an expectation amongst all cohorts. Digital Vault solutions like FutureVault can help provide additional value in this area, especially when it comes to moving away from legacy systems and paper-based workflow.  

Digital vault technology will become the centerpiece of financial services and information management. Digital Vaults are poised to become one of the single most important pieces of the modern tech stack within financial services and wealth management. In essence, the vault construct ‘connects the disconnected’ within organizations leading to massive efficiency gains and cost savings while at the same time introducing a new value proposition paradigm for enterprises, advisors, and their clients. 

G Scott Paterson
Founder & Executive Chairman (Quoted July 2018) 

Who are Digital Vaults for? 

Types of Firms Using Digital Vaults  

While Digital Vault technology is and will become industry-agnostic, we are witnessing massive interest, adoption, and use cases within the financial services and wealth management industries. 

With the number of document-drive processes, both internal and external, that take place daily, along with how connected documents are to client servicing, it should come as no surprise that there is a large affinity for Digital Vaults within these industries.  

Below are the types of organizations and firms actively using or beginning to use Digital Vault technology across the back office, front office, and with clients.   

The Key Stakeholders Using Digital Vaults  

Traditional and legacy-based document management tools often focus on providing value to one function or ‘level’ of an organization; usually, that ends up being either a back-office and compliance focus or on the advisor. This results in a very disconnected document handling workflow across front, middle, and back-office teams along with key stakeholders involved in the process chain.  

Advanced and leading Digital Vault solutions like FutureVault offer an innovative approach to managing documents and the processes that they’re involved with through a multi-tiered solution where all constituents involved — front, middle, and back-office teams, along with clients and households – benefit and gain tremendous value by having access to the critical information, data, and documentation that is relevant to them and their role.  

  • Home office and back-office teams: View and manage Advisors and advisory teams, along with the document exchanges that take place between advisors and their clients, in addition to the Head Office being able to deliver documents securely (and in many cases with automation) to both advisors and clients. This provides compliance officers with an extra degree of confidence knowing compliant document handling activities are taking place. 
     
  • For front office teams and financial advisors: Having secure administrative access makes it easy to manage clients while securely exchanging, collecting, and managing critical client files and information within one centralized location. This reduces and eliminates significant time spent on manual document-related tasks and compliance risks, while streamlining document workflows to efficiently scale and build more trust with clients. 
     
  • And lastly, clients reap the ultimate benefit of being able to manage their life’s most personal information, data, and documents (content) securely and efficiently, at their fingertips, by having access to their own Digital Vault (what we refer to as the Personal Life Management Vault™), materially improving collaboration and engagement with not only their financial advisor, but with their centers of influence and other Trusted Advisors. This includes all family-related documents, government IDs, estate plans and wills, medical and health records, legal documents, business documents, and real estate documents even including lease agreements of properties.

What Types of Documents Should Go in a Digital Vault? 

The types of documents that get stored in a Digital Vault will ultimately come down to the need for both the firm and the individual (client), and importantly will be heavily influenced by compliance and internal policies for recordkeeping and retention.  

With that being said, it is recommended that the following documents be uploaded and securely stored within Digital Vaults to make sure that you have quick and easy access to critical information, data, and documentation when and wherever you need it. 

  • Financial and investment documentation: Monthly investment statements, quarterly and annual performance reports, account opening information, and more.  
  • Estate Planning Documents: Wills, Trusts, Power of Attorneys, etc. 
  • Legal agreements: Divorce certificates, child custody agreements, bankruptcy filings, and other legal documents. 
  • Client Profiles: Meeting notes, presentations, and other detailed client information. 
  • Regulatory Documents: Documents required for compliance and reporting are securely stored for easy retrieval. 
  • Insurance Documents: Life insurance, health insurance, property insurance, auto insurance, and other insurance coverage documentation. 
  • Tax Documents: Tax filings, tax returns, W2/T4 forms, 1099s and other tax-related documents. 
  • Personal Identification: Passports, driver’s licenses, social security cards, and other government-issued identification. 
  • Business Documents: Articles of incorporation, partnership agreements, operating agreements, business financial statements.  
  • Medical Documentation: Health records, prescription information, medical test results, and vaccination records. 

Not All Digital Vaults are Created Equal 

PSA: Not all Digital Vaults are created equal.  

If you or your firm are currently evaluating Digital Vault technology, it’s important to call out and mention here that many so-called ‘Digital Vault’ solutions are nothing more than a basic feature set within a larger product.  

If your firm or enterprise is relying on this as a scalable solution, chances are you’re in for some trouble down the road. These Vault ‘features’ serve nothing more than being a light document storage and dumping ground and should in no way be considered or classified as a true Digital Vault solution. 

Advanced Digital Vault solutions (FutureVault) far exceed basic document storage capabilities; they offer efficiency for both back and front-office teams while enhancing digital client experiences. 

Here’s where Digital Vault solutions stand and differ from basic document management or document storage repositories:  

  • Multi-Tiered Access: For a multi-leveled organization which might include credit unions and banks, broker-dealers (investment dealers), Multi-Family Offices (MFOs), and even large Registered Investment Advisors (RIAs), this is the most effective, efficient, and compliant way to store, access, and manage enterprise and household documents in one centralized platform. The concept of multi-tiering moves away from a one-way, inefficient, rigid document “feed” to a secure, collaborative, flexible, multi-way document exchange platform. 
  • Structure & Organization: Advanced vaults like FutureVault make it easy to create standardized folder templates and file structures, along with offering different folder types and ‘areas’ within the Vault to support internal and external processes, workflow, and access. 
  • ➜ Essential (business relationship between firm/advisor and client) 
  • ➜ Personal (personal and household client documents) 
  • ➜ Private (documents such as meeting presentations that may be private to the client) 
  • ➜ In Review (documents here are in an ‘in review’ queue before being published to client Vaults) 
  • ➜ Global (a universal folder across your clients – imagine uploading one document such as a monthly commentary that then gets delivered to all clients) 
  • ➜ OBA (Outside Business Activity folders may be private to the Advisor and not viewed by the Home Office, but accessible to Clients doing business with them)  
  • Tagging & Labeling: Advanced Digital Vaults allow for both basic and sophisticated document (and folder) tagging using metadata and along with Entities (a patented FutureVault feature) to associate documents to different people, businesses, properties, or accounts, along with being able to add labels to folders and documents to improve document workflow, visibility, and overall management.
     
  • Advanced Permissions: This is what our team refers to as Trusted Advisor Permissions, which also happens to be a patented platform feature. Empower the collaboration process through secure permissioning, allowing Trusted Advisors (collaborators) to access specific areas, with specific roles and permission within one or many Vaults. All activity on documents (viewing, sharing, downloading, etc.) is tracked in real-time and recorded with Audit Trails.  
  • Document Automation: Automate critical documents, such as financial statements, onboarding documentation, performance reports, and more from a variety of third-party tools and systems by leveraging Open APIs and Bulk Upload capabilities. When your firm deals with thousands of households and hundreds of thousands of documents, being able to leverage a leading Digital Vault solution to automate documents saves an enormous amount of administrative and back-office time.
  • Regulatory Confidence: Advanced Digital Vault platforms, such as our multi-tiered digital vault solution, meet data residency, data redundancy, document retention, and disaster recovery requirements while providing the flexibility and structure needed to effectively store, access, manage, and archive documentation required to be evidenced. Digital Vaults offer head office teams and compliance officers oversight on document handling activities at scale, across all levels of the organization. 
  • Enhanced Client Experiences: Tailor unique experiences by providing clients with secure access to personalized documents and financial information. The bottom line is this, the households and families you work with should not have to ask you how or where to access their documents or feel like they need to jump through hoops to find them. Your clients should be able to freely access their critical documents and information across the household, across multiple entities, and across multiple geographies, any time, anywhere, at their convenience. That is the power of providing your clients with a client-facing digital vault, the Personal Life Management Vault™. 

What we’re seeing play out in real-time is that the Digital Vault is becoming the centralized location, and the secure single source of truth for not only client files but also for compliance and corporate documentation. This ensures that ‘final’ documents are safeguarded within an audit-ready, centralized location. 

Conclusion 

In today’s modern world of financial services and wealth management, embracing cutting-edge technology is no longer optional – it’s fundamental and table stakes.  

Secure Digital Vaults have emerged and evolved as transformative tools, augmenting security and compliance, optimizing operations, and delivering unparalleled value to professionals and clients.  

As you navigate this dynamic landscape, remember that a secure Digital Vault isn’t just a solution; it’s a strategic competitive advantage that will help your firm create massive efficiencies and create a strategic moat, especially in the era of The Great Wealth Transfer.  

But buyers beware. Not all Digital Vaults are created equally.  

FAQs 

Q1: What is a Digital Vault? 

A Digital Vault is an online security vault; it is the virtual equivalent of a safety deposit box to store and safeguard critical documents, data, and information. Much like a physical vault is used to store and protect valuable physical assets, such as money, banknotes and certificates, jewelry, physical documentation, and more, a Digital Vault is used to safeguard important and valuable digital assets; namely files and documentation. 

Q2: How do Digital Vaults enhance security? 

Digital Vault solutions reside in the cloud and leverage all the benefits of data availability, redundancy, and low storage costs. More importantly though, Digital Vault platforms, and notably the FutureVault platform, leverage institutional-grade security with modern encryption (in-transit and at-rest) to confidently protect those documents, data, and digital assets within a secure environment. 

Q3: Who benefits from Digital Vaults? 

Digital Vaults offer immense value to broker-dealers, advisory firms, family offices, insurance distributors, accounting firms, credit unions, banks, and their professionals and clients. 

Q4: What documents should be stored in a Digital Vault? 

Documents such as financial statements, legal agreements, client profiles, and regulatory documents are ideal for secure storage in a Digital Vault. 

Q5: How do Digital Vaults go beyond basic storage? 

Digital Vaults offer trusted advisor permissions, document automation, and enhanced client experiences, revolutionizing operational efficiency and client interactions. 

Hosting Family Meetings 101 - FutureVault

The 6-Step Blueprint to Hosting Multi-Generational Family Meetings

Family Meetings are one of the most effective, tried-and-true approaches that can play an incredibly important role in helping advisors understand family dynamics, create an intergenerational continuity plan, and importantly, stay relevant with and for the next generation.

When done right, Family Meetings encourage all necessary family members to participate in discussing all of the critical areas that go into such a plan; goals and values, transfer strategies, legacy and estate discussions, family assets and wealth, and more.

At the end of the day, this equips the family with a better understanding of everything and everything under the sun and empowers advisors with the necessary information they need to deliver real value.

In this article, we’ll highlight and unpack the 6 critical steps to running and facilitating effective Family Meetings.

Benefits of Facilitating Multi-Generational Family Meetings

Before we jump into the six steps of hosting Family Meetings, let’s quickly cover why your firm and your advisors should be hosting them in the first place. In particular, there are four benefits and outcomes that come to mind:

  • ➜ Family Meetings often result in the retention of family relationships and assets;
  • ➜ Family Meetings can lead to a better understanding of family dynamics and information;
  • ➜Family Meetings pave the way for building trust with the next generation;
  • ➜ Family Meetings can help increase the value of an advisor’s practice and set the stage for a successful succession plan

The 6-Step Blueprint to Hosting Multi-Generational Family Meetings

Advisors have a real opportunity to foster meaningful family discussions and ensure smooth wealth transitions by following the below 6 steps as a “blueprint” to hosting Family Meetings. 

It’s worthwhile to call out and mention, however, that your role as the Advisor when hosting Family Meetings is that of a Trusted Facilitator. The best way to approach them is that they are actually not your meetings, but rather you are there to facilitate the conversation and guide the family, especially when discussing the financial and wealth side.

You’re there to make everyone feel comfortable. To help everyone understand both the basic and complex financial topics. To encourage dialogue and participation that helps everyone in the family better understand the dynamics that will lead to a successful wealth transfer.  

For each of the six steps below, we’ll provide bulleted items so that you can easily take what’s here and use it as your own actionable blueprint.

Step 1: Preparation 

  • ➜ Set clear objectives and coordinate the initial logistics with your immediate clients
  • ➜ Understand your client’s goals, their preferences, and what they value
  • ➜ Work with your clients to identify key family members, including their next-gen and any expected heirs to the family wealth, to involve in these meetings
  • ➜ Share the agenda with the family and key family members required for attendance in advance of the initial meeting (and subsequent meetings)
  • ➜ And importantly, work with your client to become familiar with existing trusted advisors and third parties involved in dealing with the client (real estate agents, lawyers, accountants, bankers, etc.)

Step 2: Creating a safe environment for the family

  • ➜Establish a respectful and confidential atmosphere where the family is comfortable discussing financial and sensitive information
  • ➜ Encourage open dialogue and active listening
  • ➜ Ensure all family members feel valued and heard — this may involve ensuring everyone has a chance to table any questions or concerns by quite literally going around the room in order

Step 3: Establishing the family’s goals and values

  • ➜ Facilitate a discussion where one of the primary goals is to identify aspirations and values that are shared by family members
  • ➜ It’s important here to make sure that conversations are centered around wealth, legacy, and purpose
  • ➜ The ultimate goal is to foster unity and alignment among family members; this will involve making sure individual goals and values from all family members are discussed

Step 4: Educate and empower clients and the next generation

  • ➜ Provide access to educational resources (articles, videos, whitepapers) to as a way to help improve basic financial literacy and overall financial wellness
  • ➜ Focus on delivering education around financial topics that are relevant to the family’s current situation and their future goals as a family unit to reinforce the family vision
  • ➜ Empower younger family members to express their perspectives and more importantly, to take action
  • ➜ Cultivate their understanding of wealth management principles

Step 5: Develop the Wealth Transfer Plan

  • ➜ Collaborate with the family (and key family members) to address estate planning, philanthropy, legacy, and succession as critical components of the plan
  • ➜ Involve legal and tax advisors as foundational advisors for creating the plan
  • ➜ Document decisions, suggestions, and recommendations, and outline the next steps for the family as a unit and for individual family members for overall legacy and succession accountability

Step 6: Ongoing documentation and review  

  • ➜ Family Meetings and intergenerational planning are never a “one-and-done” ordeal. It’s important to establish ongoing communication with the family and to encourage key family members to follow through with their individual responsibilities
  • ➜ As situations and scenarios change, which they often do in life and with finances, your role will be the review and adapt the plan to the breadth of changing circumstances
  • ➜ Address concerns, celebrate milestones, and reinforce family values
FutureVault Request a Demo

The Family’s Digital Vault is the backbone of it all

In today’s rapidly evolving landscape of wealth management, where families span multiple generations and geographies, the importance of effective communication and seamless access to critical information cannot be overstated.

This is precisely where and why a secure digital vault plays such an important role — and completely transforming the way wealth management professionals, firms, and family offices facilitate multi-generational family meetings.

Digital Vaults act as the centralized hub of family information, streamlining the flow of information and documentation, and ensuring critical information and documentation are accessible on-demand for key family members, and importantly, for key Trusted Advisors.

Traditionally, the organization and retrieval of sensitive financial documents and data for family meetings presented a significant logistical challenge. Advisors and firms had to sift through countless physical files, navigate complex folder structures, and manage a myriad of formats – all while ensuring security, confidentiality, and of course, compliance. This often led to inefficiencies, delays, and potential information gaps.

Fortunately, secure digital document vaults like the Personal Life Management Vault™ address and overcome the many challenges by making it easy, secure, and efficient to upload, manage, access, and share a range of documents, including financial statements, legal agreements, estate plans, tax records, investment portfolios, business documentation, and more.

With families dispersed across different regions, continents, and timeframes, the vault enables advisors, family members, and additional third parties (accountants, lawyers, agents, etc.) to connect, collaborate, and access information in real-time.

Preparing for multi-generational family meetings becomes a streamlined process, as advisors can readily compile and share relevant documents, presentations, and reports all within the Vault. This ensures that every family member is well-prepared and informed, fostering more productive discussions and strategic decision-making during the meeting itself.

Frequently Asked Questions

Question 1: Why should my firm and advisors prioritize hosting Family Meetings?

Hosting Family Meetings offers several significant benefits, including the retention of family relationships and assets, a deeper understanding of family dynamics and information, building trust with the next generation, and increasing the value of your advisor’s practice while setting the stage for a successful succession plan.

Question 2: What role does the advisor play in facilitating Family Meetings?

The advisor’s role in Family Meetings is that of a Trusted Facilitator. While you guide and facilitate the conversation, the meetings belong to the family. You help create a comfortable environment, ensure everyone understands financial topics, encourage dialogue, and assist the family in understanding dynamics crucial for a successful wealth transfer.

Question 3: How do I prepare for hosting effective Family Meetings?

To prepare for successful Family Meetings, it’s essential to set clear objectives, coordinate logistics, understand your clients’ goals and values, involve key family members, share the agenda in advance, and familiarize yourself with existing trusted advisors and third parties involved in dealing with the client.

Question 4: What is the significance of a secure digital vault in multi-generational family meetings?

A secure digital vault serves as a centralized hub for family information, streamlining the organization and retrieval of critical documents. It facilitates easy, secure access to financial statements, legal agreements, estate plans, tax records, and more, enabling advisors, family members, and third parties to connect, collaborate, and access information in real-time.

Question 5: How do Family Meetings contribute to intergenerational wealth transfer?

Family Meetings play a vital role in intergenerational wealth transfer by establishing an open dialogue where family members can discuss goals, values, and legacy. They educate and empower the next generation, address estate planning and succession, and encourage ongoing communication and adaptation as circumstances change, fostering unity and alignment among family members.

Succession Planning for Financial Advisors - FutureVault

Succession Planning for Financial Advisors: The Top 5 Most Important Success Planning Considerations

With M&A activity continuing to blossom and the average age of financial advisors being well over the age of 50, succession planning for financial advisors is becoming an increasingly important subject and area of focus.

Succession planning is a critical aspect of any and every financial advisory practice. Advisor succession planning involves carefully establishing a strategy to ensure the seamless transfer of clients, assets, and responsibilities when a financial advisor retires or leaves and exits the business.

Advisor succession planning is a strategic process that enables financial advisors to ensure a smooth transition of their business to the next generation of advisors. It involves identifying and grooming potential successors, addressing client concerns, and ensuring regulatory compliance throughout the transition.

By proactively addressing succession planning considerations, financial advisors can protect their clients’ interests, maintain business continuity, and preserve their legacy. In this article, we will discuss the top five most important considerations when it comes to succession planning for financial advisors, along with the essential role of a Digital Vault in organizing and structuring advisor business and client data, information, and documents.

Table of Contents

  1. Importance of Succession Planning
  2. Identifying Potential Successors
  3. Transitioning Client Relationships
  4. Ensuring Regulatory Compliance
  5. The Role of a Digital Vault in Succession Planning
  6. Communicating the Succession Plan
  7. FAQs
  8. Conclusion

The Importance of Succession Planning for Financial Advisors

Succession planning is incredibly important for financial advisors for a variety of reasons, including the following:

  • Business Continuity: A well-executed succession plan ensures that clients’ financial needs are met without interruption, maintaining the trust and relationships established by the retiring advisor. Importantly, communication with clients (and family members) must also be taken into account.
  • Client Retention: When a financial advisor sells or exits the business, clients may feel uncertain and seek alternatives. A well-defined and well-thought-out succession plan helps retain clients by instilling confidence in the firm’s ability to deliver consistent service and value.
  • Value Preservation: A successful succession plan preserves the value of the financial advisory practice. By grooming and transitioning successors, the retiring advisor can maximize the value of their business.
  • Regulatory Compliance: Succession planning ensures compliance with industry regulations, such as notifying clients about the transition and transferring assets appropriately.

Consideration 1: Identifying Potential Successors

Identifying potential successors for the business is, without a doubt, one of the most critical steps—or rather considerations— in the succession planning process. Consider the following factors:

  • Skills and Expertise: Look for individuals within the firm who possess the necessary skills, experience, and knowledge to effectively serve clients.
  • Cultural Fit: Evaluate potential successors based on their alignment with the firm’s values, vision, and client-centric approach.
  • Leadership Abilities: Assess the leadership qualities of potential successors, as they will be responsible for guiding the firm and maintaining client relationships.
  • Mentoring and Training: Provide mentorship and training opportunities to develop the skills of potential successors and ensure a smooth transition.

Consideration 2: Transitioning Client Relationships

Your clients are everything. To you, the firm, and your staff—they’re the reason why you entered the business in the first place. It should go without saying that smoothly transitioning client relationships is essential for a successful succession plan. Consider the following steps:

  • Introducing the Successor: Introduce the successor to clients well in advance to establish rapport and trust. Encourage joint meetings and gradually transition responsibilities.
  • Maintaining Communication: Ensure ongoing communication with clients throughout the transition process. Address any concerns or questions promptly to maintain transparency and trust.
  • Updating Client Documentation: Update client account documentation to reflect the change in advisor. Provide clear instructions regarding any required paperwork or account transfers.

Consideration 3: Ensuring Regulatory Compliance

Adhering to regulatory requirements is table stakes when implementing a succession plan. Consider the following:

  • Notification to Clients: Notify clients in writing about the impending succession plan, providing information on the new advisor and the transition process.
  • License and Registration Transfer: Ensure the proper transfer of licenses and registrations for the successor advisor to avoid any legal or compliance issues.
  • Compliance Review: Conduct a comprehensive review of the successor advisor’s compliance record to ensure they meet all regulatory standards and have a clean disciplinary history.
  • Client File Management: A large part of compliance requirements ensures that the proper data, information, and documentation is maintained, accessible, and meets books and records requirements, including document retention.

    *This is where having a secure and structured digital vault can proactively support transitioning advisors and overall information governance.

Consideration 4: The Role of a Digital Vault in Succession Planning

Digital Vaults have increasingly become an indispensable tool for institutions and financial advisors for several process-driven use cases, and importantly, during succession planning.

A Digital Vault is a secure and centralized platform that allows advisors to organize and structure their business documents while also better structuring and organizing client files and critical documentation needed for operational and compliance purposes.

Here are the key benefits of using a Digital Vault in the succession planning process:

  • Document Organization: A Digital Vault provides a structured environment to store and manage business and client documents efficiently. Advisors can categorize and label appropriate business documents while also creating Vaults with defined folder structures, labels, and entities for their clients to easily (and efficiently) manage everything at scale.
  • Secure Storage: Security is paramount when it comes to storing sensitive client information and business documents. A Digital Vault offers robust security features, including encryption, user access controls, and regular backups, ensuring the confidentiality and integrity of the stored data.
  • Collaboration and Sharing: During the succession planning process, effective collaboration is essential between the retiring advisor, potential successors, and other stakeholders. A Digital Vault facilitates seamless collaboration by allowing multiple users to store, access, and share documents securely, eliminating the need for physical paperwork and eliminating back-and-forth processes.
  • Compliance Management: Regulatory compliance is a critical aspect of succession planning. A Digital Vault provides features to help financial advisors maintain compliance, such as data residency, data redundancy, digital audit trails, and document retention policies. These features ensure that the necessary documentation is up-to-date, easily accessible, and retained as per regulatory requirements.
  • Efficiency and Productivity: With a Digital Vault, financial advisors can streamline their document management processes, saving time and improving overall productivity. The ability to quickly search for and retrieve documents, automate document workflows, and eliminate manual paperwork allows advisors to focus more on client relationships and the succession planning process itself.
FutureVault Request a Demo

Consideration 5: Communicating the Succession Plan

Clear and effective communication is key to a successful succession plan and overall transition when handing over the keys to the business. Consider the following strategies:

  • Internal Communication: Communicate the succession plan to all staff members, advisors, and board members to ensure everyone is aligned and aware of their roles and responsibilities during the transition.
  • Client Communication: Develop a communication strategy to inform clients about the succession plan, emphasizing the continuity of service and the qualifications of the successor advisor. It’s important to understand that clients may feel uneasy during any transition and will likely have many questions; be patient and understanding.
  • Marketing and Branding: Update marketing materials, including the firm’s website, collateral and social media handles, to reflect the changes in leadership and reinforce the continuity of the advisory practice.

FAQs

What is a Digital Vault?

A Digital Vault is a secure and centralized platform that allows financial advisors to organize and structure their business documents while also better structuring and organizing client files and critical documentation needed for operational and compliance purposes.

How does a Digital Vault benefit succession planning for financial advisors?

A Digital Vault enhances succession planning by providing document organization, secure storage, collaboration and sharing capabilities, compliance management features, and improved efficiency and productivity.

What security features does a Digital Vaulttypically offer?

A Digital Vault offers robust security features such as encryption, user access controls, regular backups, and secure authentication protocols to ensure the confidentiality and integrity of stored data.

How does a Digital Vault help with compliance management?

A Digital Vault assists with compliance management by providing features such as document versioning, audit trails, and document retention policies, ensuring that advisors can meet regulatory requirements and easily access necessary documentation.

Can a Digital Vault be accessed remotely?

Yes, a Digital Vault can be accessed remotely, allowing financial advisors and their team members to securely access and manage documents from anywhere, anytime on laptop, tablet, and mobile devices.

In conclusion, succession planning is a crucial process for financial advisors, and a Digital Vault plays a vital role in organizing and structuring business and client documents. By leveraging the benefits of a Digital Vault, financial advisors can enhance their succession planning efforts, streamline document management, ensure regulatory compliance, and improve overall efficiency. By combining strategic planning, effective communication, and the right technology solutions like a Digital Vault solution, financial advisors can successfully navigate the succession planning journey and secure the future of their practice.

Intergenerational Continuity Plan Checklist of Documents - FutureVault

Intergenerational Continuity Planning Checklist: What Documents and Information do you Need?

Having a structured information management plan in place and providing family members with access to critical information and documents is a key component of any intergenerational continuity plan and succession plan. This will outline some of the critical documents required when creating and maintaining an intergenerational continuity plan.

An intergenerational continuity plan is a comprehensive strategy designed to ensure the seamless transfer of wealth, values, and legacy from one generation to the next. It involves documenting and organizing important information, instructions, and legal documents to facilitate the smooth transition of assets, responsibilities, and decision-making across the family and across generations. 

Accurate information and documentation are crucial in an intergenerational continuity plan for several reasons:

  1. Clarity of Intentions: Accurate documentation helps clearly express the client’s wishes and intentions regarding the distribution of assets, management of investments, philanthropic goals, and any other specific instructions. It reduces the potential for misinterpretation or disputes among family members.
  2. Efficient Execution: Having accurate and up-to-date information ensures that the plan can be executed efficiently. It provides a roadmap for advisors, trustees, and family members to follow, enabling them to take appropriate actions and make informed decisions without confusion or delays.
  3. Compliance and Legal Requirements: Proper documentation ensures compliance with legal and regulatory obligations. It helps address legal requirements related to estate planning, tax filings, asset transfers, and other relevant matters, minimizing the risk of legal complications or challenges.
  4. Asset Protection: Accurate information and documentation help protect the client’s assets and wealth. It ensures that appropriate measures are in place to safeguard assets from potential risks, such as creditors, lawsuits, or other unforeseen circumstances.
  5. Continuity of Financial Affairs: Accurate documentation enables a smooth transition of financial affairs from one generation to the next. It allows designated individuals or advisors to understand the client’s financial landscape, obligations, and investment strategies, enabling them to continue managing the wealth effectively.
  6. Family Harmony and Communication: An intergenerational continuity plan promotes open and transparent communication among family members. Accurate documentation facilitates discussions about wealth transfer, expectations, and responsibilities, helping to foster family harmony and minimize potential conflicts.
  7. Preservation of Legacy: Accurate information and documentation play a vital role in preserving the client’s legacy. It allows future generations to understand the values, traditions, and stories associated with the family’s wealth, ensuring that the legacy is carried forward as intended.
FutureVault Request a Demo

A Guideline to Creating a Checklist of Documents

Below is a guideline to help firms and advisors understand the types of information and documents required for creating and maintaining an intergenerational continuity plan. It’s important to note that this is not prescriptive, and the type of information required will depend on your clients and the level of complexity around their personal, business, and financial lives.  

Will and Estate Planning Documents

  • ✔ Last Will and Testament: A legal document that outlines how assets will be distributed upon the client’s death. 
  • ✔ Living Will or Advance Healthcare Directive: Specifies the client’s healthcare wishes in case of incapacitation. 
  • ✔ Durable Power of Attorney: Authorizes a designated individual to manage financial and legal affairs on behalf of the client if they become unable to do so. 

Trust Documents

  • ✔ Revocable Living Trust: A legal arrangement that allows the client to transfer assets into a trust, providing flexibility, control, and privacy in estate planning. 
  • ✔ Irrevocable Trusts: Various types of trusts designed to achieve specific estate planning goals, such as minimizing estate taxes, protecting assets, or providing for charitable giving. 

Beneficiary Designations

  • ✔ Retirement Accounts: Ensure proper beneficiary designations are in place for IRAs, 401(k)s, and other retirement plans. 
  • ✔ Life Insurance Policies: Review and update beneficiary designations on life insurance policies to align with the client’s wishes. 

Family Governance Documents

  • ✔ Family Constitution or Family Mission Statement: A document outlining the family’s values, goals, and principles for managing wealth and fostering family unity. 
  • ✔ Family Trusts or Family Limited Partnerships: Include any structures established to govern family wealth, transfer assets, or facilitate communication among family members. 

Letter of Instruction (Letter of Intent)

  • Often included in the Family Governance Documents, this is a non-legally binding document that provides guidance to heirs or trustees on the client’s wishes regarding personal matters, wishes and intentions for the future management of their wealth and family legacy, funeral arrangements, and special bequests. 

Philanthropic Goals and Charitable Giving Plans

  • If the client has philanthropic goals or a charitable giving plan, document these intentions and include any relevant agreements or foundations established. 

Prenuptial or Postnuptial Agreements

  • If the client has a prenuptial or postnuptial agreement, ensure it is included in the continuity plan to address any potential impact on wealth distribution. 

Business Succession Plan

  • If the client owns a business, a detailed plan outlining the transfer or sale of the business to the next generation or a designated successor. 

Inventory of Assets

A comprehensive list of the client’s assets, including investment accounts, real estate holdings, business interests, and personal property. 

Financial Statements and Account Information 

  • ✔ Bank Statements: Provide statements for all bank accounts, including checking, savings, and money market accounts. 
  • ✔ Investment Account Statements: Include statements for brokerage accounts, mutual funds, ETFs, and other investment holdings. 
  • ✔ Real Estate Documents: Include property deeds, mortgage documents, and lease agreements for all owned real estate properties. 

Personal Property Inventory 

  • Create an inventory of valuable personal property such as artwork, jewelry, collectibles, and heirlooms, along with instructions on their distribution or management. 

Digital Assets and Passwords 

  • Instructions on how to access and manage the client’s online accounts, including email, social media, banking, and investment platforms. 

Debt and Liability Information

  • A record of outstanding debts, loans, mortgages, and other liabilities that need to be settled upon the client’s death. 

Insurance Policies

  • ✔ Life Insurance Policies: Provide copies of all life insurance policies, including details on coverage, beneficiaries, and contact information for the insurance company. 
  • ✔ Property and Casualty Insurance Policies: Include homeowners’ insurance, auto insurance, and any other property and casualty insurance policies. 

Tax Returns and Records

  • ✔ Personal Income Tax Returns: Maintain copies of the client’s filed tax returns for the past several years. 
  • ✔ Business Tax Returns: If the client owns a business, include corporate tax returns and related documentation. 
  • ✔ Gift and Estate Tax Returns: Keep records of any gift tax returns filed or estate tax returns related to prior generations. 

Education and Medical Records

  • ✔ Educational Records: Include transcripts, diplomas, and documentation of any education funds or trusts established for children or grandchildren. 
  • ✔ Medical Records: Maintain copies of medical records, health insurance policies, and information on healthcare providers. 

Special Considerations

  • ✔ Special Needs Planning: If a family member has special needs, include documentation and plans for their care and financial support. 
  • ✔ Family Business Agreements: If the family owns a business, include shareholder agreements, operating agreements, and any buy-sell agreements. 

Contact List

  • A document listing key contacts, including attorneys, accountants, financial advisors, insurance agents, and any other professionals involved in the client’s financial affairs. 

Succession Plan for Advisors

  • If the advisor plays a key role in managing the client’s wealth, a documented succession plan outlining who will take over the advisory relationship in the event of the advisor’s retirement, incapacity, or death. 

Regularly Reviewing and Updating the Plan

It’s important to regularly revisit and update your clients’ intergenerational continuity plans to memorialize and document any and all significant changes.

Consider reviewing and updating plans every 6 to 12 months, during routine Family Meetings, or on an as-needed basis whenever significant events take place that have an impact on the family, good or bad. These include liquidity events and the sale of a business; significant loss of assets; retirement; and death, to name a few.

For Ultra High Net Worth (UHNW) families, consider reviewing, revisiting, and updating the family’s intergenerational continuity plan more frequently due to complex financial, business, and legal structuring.

The Backbone of an Intergenerational Plan: A Digital Vault

Having a structured information management plan in place and providing family members with access to this information is a key component of any continuity and succession plan. This will help to ensure a smooth transition of assets and provide peace of mind for clients and their families.

One of the most effective ways firms and advisors can execute an intergenerational continuity plan is by implementing a secure digital vault for family legacy information and documents.

A well-structured digital vault can serve as a central repository for all of the important documents and information that clients and their families need to access in the event of a change in circumstances, such as the passing of a family member or the retirement of an advisor.

When evaluating a Digital Vault solution for intergenerational planning, consider the below as a subset of critical features:

  • ✔ Anytime, anywhere access via laptop, tablet, and/or mobile devices
  • ✔ Institutional-grade security and data privacy (encryption in-transit and at-rest)
  • ✔ Secure file-sharing permissions for Trusted Advisors and Contacts
  • ✔ Client and family member (next-gen) access and permissions
  • ✔ Ability to label and tag documents associated to various personal, financial, and legal entities (Trusts, Properties, Individuals, etc)

*This is not a comprehensive list of features to consider

Intergenerational Continuity Plan - How FutureVault Protects Family Legacy

Intergenerational Continuity Plan: Leveraging a Digital Vault to Protect & Preserve Family Relationships

More than ever, institutions and advisors need to establish an intergenerational continuity plan to retain assets and family relationships.

In today’s rapidly changing economic and demographic landscape, it is essential for advisors to develop an intergenerational continuity plan that not only helps to retain assets, but also facilitates the transfer of knowledge, expertise, and critical information to family members.

What is an intergenerational continuity plan?

An intergenerational continuity plan is a comprehensive family-focused financial plan that essentially outlines how a family’s wealth will be managed and importantly, transferred to future generations. The plan is designed to ensure that the family’s values and legacy are preserved and passed down through generations.

The primary purpose of an intergenerational continuity plan is to provide a roadmap for managing and transferring wealth in a way that aligns with the family’s goals and objectives; much like a financial plan is to align individual (or household) financial goals and objectives.

An intergenerational continuity plan typically includes strategies for managing and protecting assets, minimizing taxes, and ensuring that the wealth is distributed in a fair and equitable manner. This plan may also include provisions for charitable giving, education funding, and other philanthropic activities. It may involve the use of trusts, family partnerships, and other legal structures to facilitate the transfer of assets from one generation to the next.

Overall, an intergenerational continuity plan is a proactive approach to managing and preserving family wealth over the long term. It helps to ensure that the family’s legacy is passed down through the generations and that future generations (and heirs to the wealth) are able to build on the successes of their predecessors.

Keys to success when creating an intergenerational continuity plan.

Financial advisors looking to establish and maintain an intergenerational continuity plan for the families they work with can take action by considering the below “steps” or rather critical components to get started.

(1) Understand the clients’ goals and objectives

Financial advisors need to have a clear understanding of their clients’ goals and objectives for their wealth. They should understand the clients’ values and beliefs regarding wealth, and how they want to pass on their wealth to future generations.

(2) Involve the family

It’s important, and in fact necessary, for advisors to involve the family in the planning process. They should encourage open communication and involve all family members in the decision-making process. This helps to ensure that everyone is on the same page and understands the plan.

Hosting semi-annual or annual family meetings and playing the role of ‘facilitator’ is a tried and true way to encourage deeper and more meaningful conversations across the household to better align goals for the future.

(3) Develop a plan

Once enough information regarding goals, objectives, nuances with family details and structure, etc., along with a better understanding of family dynamics have been discussed and identified, advisors should have enough information to begin developing a comprehensive plan that includes strategies for transferring wealth to future generations. The plan should be flexible and adaptable to changing circumstances.

(4) Educate the next generation

Importantly, advisors should always be looking for ways to help educate the next generation about financial management, wealth transfer, and family values, especially when it involves a large amount of wealth being passed down through generations.

This includes teaching the basics about budgeting, saving, investing, tax strategies, and charitable giving. The more your firm and advisors educate and inform, the more trust you will establish with the next generation.

(5) Monitor and adjust the plan

After developing the initial plan, and just like any type of financial plan for clients, your work is never done. Maintaining the family’s intergenerational continuity plan requires ongoing maintenance, regular meetings, and an ongoing understanding of changing family dynamics.

All of this will ensure that the plan remains relevant and effective in achieving your clients’ goals and objectives.

Overall, creating an intergenerational continuity plan requires a collaborative effort between advisors, clients, and family members, including the next generation. By following these steps, financial advisors can help their clients ensure that their wealth is preserved and passed on to future generations in accordance with their wishes.

Information (and having access to it) is fundamental to every intergenerational continuity plan

Having a structured information management plan in place and providing family members with access to this information is one of the biggest components of any continuity and succession plan. A well-structured way to manage critical information and documents will help to ensure a smooth transition of assets and provide peace of mind for clients and their families.

One of the most effective (and efficient) ways firms and advisors can execute (and maintain) an intergenerational continuity plan is by implementing a secure digital vault for family legacy information and documents.

A well-structured digital vault can serve as a central repository for all of the important documents and information that clients and their families need to access in the event of a change in circumstances, such as the passing of a family member or the retirement of an advisor.

To create a successful continuity plan using this approach, institutions and advisors should ensure that the data and document vault being used is accessible to all relevant parties, including family members, attorneys, accountants, wealth advisors, and other trusted advisors, and that the documents are organized in a clear and easy-to-navigate manner. Importantly, it’s critical to ensure that all relevant parties have access to the appropriate areas, folders, and documentation they need to have access to.

It should go without saying that security and data privacy is table stakes. Look for a digital vault solution (FutureVault) that comes equipped with advanced encryption in-transit and at-rest, multi-factor authentication, secure access permissioning, encrypted file-sharing capabilities, regular backups, along with meeting your data residency and document retention requirements, and so forth.

And importantly, being able to access, share, and deliver critical information anytime, anywhere is critical in today’s fast-paced, digital, and remote-enabled world. Your clients (and their family members) will benefit tremendously by being able to access critical information and documents on their desktop, tablet, or mobile devices, 24/7, wherever they are in the world.

Preparing for the next generation of clients

The fact of the matter is that most financial advisors are not nearly as prepared as they need to be and that the majority of heirs to the wealth will be looking to make moves, on their own terms.

With more than 70% of heirs are likely to fire or change financial advisors after inheriting their parents’ wealth (according to Cerulli Associates), this transfer of wealth has massive implications on how firms and wealth advisors need to be operating their businesses and servicing households to better secure any chance they might have of participating in wealth transfer conversations with families, and of course, in retaining assets and relationships.

An intergenerational continuity plan is absolutely critical for firms and advisors looking to build trust and confidence with the next generation, and leveraging a best-of-breed digital document vault can ensure your firm and your advisors and putting your best foot forward to engage with current and future generations.

The Great Wealth Transfer - How to Retain Family Assets During the Great Wealth Transfer - FutureVault

The Great Wealth Transfer: How to Retain Family Assets and Relationships During the Great Wealth Transfer

The current demographic shift that is taking place in the United States, Canada, and other developed countries is resulting in a massive transfer of wealth from older generations to younger ones.

Over the next several decades, trillions of dollars will be passed down from baby boomers to their children and grandchildren. This transfer of wealth, known as the “great wealth transfer,” presents both challenges and opportunities for financial advisors and institutions.

One of the main challenges that financial advisors, firms, and institutions will face as a result of the great wealth transfer is the ability to retain family assets.

As older generations pass away, their assets will be transferred to the next generation, who may choose to take their business elsewhere if they feel that they are not receiving exceptional value from their current advisor or institution.

In fact, according to the latest Cerulli Edge—U.S. Advisor Edition, more than 70% of heirs are likely to fire or change financial advisors after inheriting their parents’ wealth. This makes it more important than ever for advisors to establish an intergenerational continuity plan to retain assets.

To retain assets during the great wealth transfer, financial advisors and institutions must focus on delivering exceptional value to family members and soon-to-be heirs. This can be achieved in a number of ways, including:

1) Providing education and training to family members and soon-to-be heirs:

Financial advisors and institutions can help to ensure a smooth transition of assets by providing education and training to family members and soon-to-be heirs on topics such as investment management, tax planning, as well as legacy and estate planning.

2) Implementing a secure digital document vault:

A secure digital document vault can serve as a central repository for all of the important documents and information that clients and their families need to access in the event of a change in circumstances, such as the passing of a family member or the retirement of an advisor.

A digital document vault ultimately serves as the single source of truth for all data, information, and documents for the family, while providing a secure and efficient way to engage and connect with other family members, centers of influence, and trusted advisors.

3) Having designated successors internally:

Advisors may want to consider having designated successors internally to take over the accounts in case of an event that would result in the primary advisor’s retirement, sudden departure, or unexpected death.

4) Offering a tailored service that fits the needs of the next generation:

Older generations may have different needs, preferences, and values than younger ones. Advisors should make sure they understand the needs and preferences of the next generation and tailor their services as well as the way they are communicating with current and future clients accordingly.

5) Helping clients to structure transfers of wealth as tax-efficiently as possible:

U.S. households are expected to transfer close to $70 trillion to their heirs and charities by 2042. Baby Boomers are expected to pass on upward of 73% of this amount (a total of $51 trillion). Tax efficiency will become increasingly important, given most of the wealth is held by older, high-net-worth (HNW) investors (those with greater than $5 million in investable assets) and will likely be subject to more expansive taxes in the coming decade.

By providing clients with tax-efficient strategies and solutions, financial advisors and institutions can help to ensure that their clients’ wealth is passed down to the next generation in the most tax-efficient manner possible.

The above numbers and statistics referenced were taken by the report from Cerulli Associates.

The 6 Most Common Books and Records Compliance Challenges - FutureVault

The 6 Most Common Books and Records Compliance Challenges

Broker-Dealers and Registered Investment Advisors (RIAs), along with other financial services and wealth management organizations, face several books and records compliance challenges that impede business efficiency and that can lead to detrimental consequences on their businesses — but they shouldn’t have to.

Here at FutureVault, our team spends a fair of time in deep discussions with Broker-Dealers, RIAs, Financial Institutions, and Family Offices who are looking to adopt and implement our secure digital document vault solutions for a variety of reasons that bring value to many different areas of their business.

One of those reasons—and a very good one at that—is books and records compliance. Specifically, with respect to helping firms and their advisors confidently meet and demonstrate books and records and document management compliance of regulatory bodies including FINRA, the SEC, IIROC, the OSC, and more.

With several technical books and records compliance requirements, along with ongoing updates and amendments to existing rules provisioned by the likes of FINRA and the SEC, come many different challenges and concerns along the way.

Thankfully, as a result of where we “sit” in the industry and the relationship(s) we have with industry experts, we can confidently say that we have our finger on the pulse with respect to understanding the challenges firms are up against as it relates to managing and demonstrating books and records compliance.

Note: While this article mentions and references FINRA and SEC books and records compliance, the challenges (and solutions) are applicable regardless of regulatory authority.

6 Common Books and Records Compiance Challenges

From what we continue to see, hear, and witness quite frequently through conversation and direct experience with the firms we work closely with, below are six of the most common challenges and concerns when it comes to books and records and document management compliance.

1) Ensuring proper retention for all record types

Regulation outlined in SEC 17a-4, sections a-e, specify the requirements for preserving records. Organizations must ensure that they have the capacity to retain all relevant documentation and records for a minimum of at least six (6) years, adhering to these rules. Wealth management and financial services firms must capture and archive all transaction-related data, including structured and unstructured records such as invoices, contracts, statements, and so forth.

According to Rule 17a-4, firms must keep records of transactions on indelible media, and index them, making them immediately accessible for two (2) years, followed by a minimum of six years of accessibility. It’s also important to note that duplicate versions of critical records must also be kept for the same duration.

Network drives, physical paper, and other legacy-based systems pose significant challenges, risks, and even financial burdens that make it difficult for firms and their staff to ensure retention periods are being met and evidenced.

2) Storing records in a non-rewriteable, non-erasable format (W.O.R.M. requirement)

In accordance with SEC Rule 17a-4(f), electronically stored content must be preserved using a non-rewriteable and non-erasable format that requires W.O.R.M. storage.

W.O.R.M. (or WORM) stands for Write Once Read Many, indicating that any information saved in WORM-compliant storage cannot be modified, tampered with, or deleted. Compliance with SEC 17a-4 mandates this standard under FINRA regulations to guarantee that all records related to business operations remain unalterable.

On October 12, 2022, the commission passed a proposed amendment that provides a modern alternative option for storing and handling books and records on WORM or immutable media. The alternative involves saving regulated records with an audit-trail capability.

This amendment to Rule 17a-4(f) requires a broker-dealer who employs an archive or electronic records management system to ensure that the system satisfies either the audit-trail requirement or the WORM requirement.

If the audit-trail option is chosen, the broker-dealer must utilize a records management system that preserves regulated records in a way that allows for the recreation of the original regulated record in case of corruption, modification, or deletion.

3. Scattered and disparate systems being used to manage and archive documents

The continued and prevalent use of disparate systems poses several challenges in and of itself, including an inability to effectively discover and retrieve records or even at all.

Compliance with Section 17a-4(j) requires the capabilities of firms to discover and retrieve records. Nonetheless, records may become misplaced among various systems because not all content is identifiable or retrievable without appropriate tools. The inability to search and access critical documentation and records poses a significant risk of non-compliance and leads to poor operational processes.

Physical paper records and documents pose another risk; appropriately storing and retaining physical office records for the required two-year period as specified in SEC 17a-4(l).

Here’s what we see as one of the biggest concerns, and quite frankly, far more often than we should; different (multiple) recordkeeping and document systems being used for the different types of documents at the different levels of an organization.

What exactly do we mean by this?

Oftentimes, one platform or system might be used to manage and access head office, enterprise, and compliance documentation. Another system might be in place for advisors to manage their business documents and to receive documents from the head office or their Broker-Dealer. And a third or even fourth platform might exist to support the delivery, access, retrieval, and management of critical client documentation such as tax documents, estate plans, and account statements.

This leads to significant issues in the long term, making it incredibly difficult to stay compliant or demonstrate compliance, let alone the many red flags from an operational, experience, and workflow perspective.

4. Inability to efficiently evidence documents and conduct internal/external audits

The above challenges that we’ve already discussed can make it next to impossible to efficiently evidence documentation, especially on-demand and within appropriate timelines.

When you combine that with poor internal and external audit practices or rather an ability to sufficiently provide materials and required documentation to auditors in a timely manner, then you’re only setting yourself up for a poor audit review and running the risk of auditors flagging your business, or worse, delivering fines.

To avoid fines, loss of certification, loss of credibility, and damaging press coverage, organizations must be able to conduct periodic internal and external audits with FINRA to prove that they are SEC-compliant.

The timeliness of an audit, and the ability to deliver evidenced documentation on demand, in one centralized location, with no issues whatsoever, signals to auditors and authorities that your firm has polished processes and importantly, demonstrates compliance.

The opposite is also true; slow responses and slower-than-expected delivery of critical evidence (documents) often signal to auditors that something might be going on behind the scenes and can be seen as a risk to regulatory authorities.

5. Data and document ownership and access control

Really what we are referring to here is that the custodian partner (oftentimes multiple custodian partners) cannot — or rather should not — be the owner where client documents reside.

Broker-Dealers, RIAs, and every advisor is ultimately responsible for these documents and must maintain those records confidently.

We have seen, in far too many circumstances that it’s somewhat scary, firms being under the impression that client data and documents are safe in the hands of the custodian. While there is some truth to this, the fact of the matter is that Broker-Dealers, RIAs, and every advisor is ultimately responsible for these documents and must maintain those records confidently.

Not only is having ownership over documents on a platform of your own a good habit, practice, and experience for your clients, it falls in line with the requirements of regulatory authorities.

For firms that have multi-custodial relationships (partnerships), having complete control and flexibility over client documentation (statements, account opening documents, tax documents, etc) will provide you with a ton of confidence and support from an operational lens.

6. Use of non-secure and non-compliant document exchange tools

Last but certainly not least on our list of challenges and concerns, we continue to witness and see widespread use of non-secure and non-compliant file-sharing tools and practices still being used almost daily by firms, their advisors, and key staff members.

Surprisingly, or maybe not so much, email continues to be a massive culprit, likely due to familiarity, that puts client information, data, and documents at risk when shared and exchanged using this method.

We recently shared a “horror story” and a real-life anecdote of a financial advisor that shared sensitive financial and personal information over email to their client which ended up being delivered to that advisor’s entire client list. Ouch! You can read the story here if interested.

Overcoming Books and Records Challenges to Meet SEC 17a-4 Compliance with FutureVault

The challenges and concerns mentioned above are no joke. They can land firms in boiling hot water and can lead to:

  • Massive fines
  • Mistrust from existing clients
  • Reputational risk in the industry
  • Suspension or loss of licenses

Thankfully, solutions like FutureVault exist to help organizations overcome these challenges to meet and demonstrate compliance with confidence, along with providing massive value by improving operational efficiency and by delivering an enhanced digital client experience.

FutureVault Request a Demo

Let’s take a look at precisely how firms can overcome these challenges with FutureVault.

1. FutureVault can automate the retention and disposition of all record types to ensure SEC 17a-4 compliance

FutureVault’s cloud-based secure digital document vault makes it easy for any and all types of firms to confidently meet and satisfy the different retention requirements through automated configuration. Being able to back up and retain all your information ensures not only SEC 17a-4 compliance, but overall security while giving you a full picture of your enterprise, advisor, and client data and documents as a whole.

This includes vendor-related documentation, advisor documents and statements (commission reports), email-based communications, client statements and quarterly performance reports, tax documents, account opening documentation, emails, any structured data (ex: spreadsheets) or unstructured data (ex: scanned pdfs, images, text-based docs), and so forth.

FutureVault leverages Optical Character Recognition (OCR) technology to allow for the effective filtering, searching, and retrieval of critical data, information, and documents. Even scanned (via the mobile application) or uploaded images are processed OCR for text extraction, allowing for the complete search of text within image-based files.

FutureVault’s DR4 framework enables firms and advisors to exceed security standards and regulatory requirements. This framework is all about preserving the security and integrity of confidential information and documents:

Document retention: FutureVault maintains historic copies of your data and your client data to follow your own compliance framework and the requirements set out by the authorities that regulate your organization.

Data residency: With FutureVault, your data is encrypted and backed up in different regions, ensuring your data residency requirements are met.

Data redundancy: In addition to constant backups, documents are replicated and converted into PDFs once ingested into the platform, with the original document being maintained. 

Disaster recovery: Our backup and disaster recovery plan meets stringent requirements to prevent data loss and interruption.

Read more about FutureVault’s platform security and compliance overview.

2. WORM Storage to prevent alteration or deletion of documents

Making the content immutable after the initial write is critical to prevent any tampering or deletion so it is truly locked in and compliant with SEC 17a-4. In FutureVault, every and any document that makes its way into the Vault is meant to be delivered in its final form, and as a result, documents delivered to clients (as an example) by advisors or administrative users cannot be deleted, removed, or altered in any way.

Documents that are automatically ingested into the Vault via integration and APIs from third parties such as custodians, portfolio management solutions, and so forth, are delivered in an unalterable format to ensure that they too cannot be deleted, removed, or tampered with once delivered in order to meet WORM storage requirements.

3. Audit trail functionality on every document

Every single document that exists within the FutureVault platform contains an associated audit trail that tracks and records all activity related to each document, in real time. This audit trail cannot be edited, removed, or tampered with by any user on the platform.

Each audit trail provides data that includes:

  • the user name (and ID) who performed the action;
  • the type of action performed (upload, download, share, view, etc.,); and
  • a timestamp of when the activity took place

Audit trails make it easy to conduct internal and external audits by providing evidence of the activity associated with documentation and data being reviewed and that is necessary to demonstrate compliance with SEC17a-4 regulation.

Not only do audit trails demonstrate compliance, but they also provide an additional layer of transparency, accountability, and peace of mind.

4. Single and bulk export capabilities

FutureVault provides powerful search capabilities at the document, folder, and contact levels, allowing for easy access and discovery of all content.

This is made possible by automatic Optical Character Recognition (OCR) technology and text extraction for image-based files.

All documents, including emails, scanned PDFs, and images with handwritten markings, can be exported and downloaded individually or in bulk at the folder level, enabling quick and easy retrieval on demand.

Audit trails associated with documents can also be exported in bulk, on request, for recordkeeping purposes and to provide to regulatory authorities as requested.

5. Single source of truth for all enterprise, advisor, and client records

For the majority of our clients, the FutureVault platform has become the single source of truth for all critical documentation; enterprise, advisor, and client documents.

Our multi-tiered platform architecture is what makes this possible; this essentially means that there are different levels, roles, and access permissions for the different levels of an organization.

At the head office/back office level (which includes Broker-Dealers), administrative users can retain, store, manage, and access all critical enterprise and compliance-related documentation. Head office teams can also exchange documents with advisors and view document exchanges between advisors and clients.

At the front office or advisor level, advisors can manage their critical business (practice) documentation, exchange and share documents with their home office or Broker-Dealer, and can engage in securely delivering and exchanging documents with clients.

At the client and household level, clients are provided their own client-facing digital vault (the Personal Life Management Vault™) where they can manage, share, access, and exchange the necessary documents related to the business relationship between them and their advisor.

As a firm, having access to all of these different levels and types of documents enables you to move away from the use of multiple, disparate systems, to now taking advantage of a single source of truth for all types of records.

6. Secure and compliant document exchange tools

With secure document exchange tools and functionality, FutureVault helps firms, advisors, and clients protect sensitive information exchange by ensuring that all exchanges take place within the Vault, for efficiency and security purposes. This also ensures that all information and document exchanges that do take place are tracked via the audit trail functionality, ensuring compliance coverage and peace of mind.

Features and tools include, but are not limited to:

  • Secure document checklists
  • Inbound-only unique email forwarding
  • Encrypted file-sharing link
  • Automated document delivery with integration and APIs
  • Secure bulk upload capabilities
  • Global Folders and pre-populated documents

7) Streamline audits with secure permissions to auditors

FutureVault’s patented Trusted Advisor permissioning model enables firms to securely grant permissions to third parties involved in various areas of their business, including external audits by organizations such as FINRA and the SEC.

Trusted Advisors are granted access to discrete portions of the Vault that they are permissioned into, allowing them to view, access, and manage content and documents depending on their level of permissions.

All activities performed by Trusted Advisors, including auditors, are tracked and recorded in real time through the audit trail functionality.

By providing a centralized environment for auditors to conduct examinations, firms can confidently demonstrate compliance and respond to document requests in real-time, on demand.

Another proven way to help streamline the entire audit process is by switching your onboarding process to a digital onboarding provider to ensure compliance across the board, better back-office handling, recordkeeping, and an overall better experience.


Final words about meeting books and records compliance

Maintaining proper books and records compliance is crucial for businesses of all sizes and types.

Not only is it required by law, but it also plays a vital role in establishing trust and credibility with clients. By keeping accurate and up-to-date records, businesses can demonstrate their commitment to transparency and accountability, as well as their ability to operate efficiently and effectively.

With the advent of cloud-based digital solutions such as digital document Vaults, firms can automate and streamline record-keeping processes, reduce the risk of errors, omissions, and non-compliance, while also improving overall productivity and cost-efficiency.

In today’s fast-paced and highly regulated environment, staying compliant with books and records regulations is no longer optional. It’s a necessary part of doing business that can help ensure long-term success and growth.

Want to learn more about how FutureVault can ensure that your organization meets SEC 17a-4, or another regulation? Get in touch with our team today to book a discovery call with our Solution Experts.

A costly mistake that could have been easily avoided - a financial advisors worst nightmare

A nightmare for any financial advisor: one very costly yet easy-to-avoid mistake

Last week, my sister-in-law called us to share some news while at the same time seeking some advice.

Her and her husband’s financial advisor, unfortunately… and unintentionally, of course… made a very easy but costly mistake…

An email was sent to them with some account and portfolio updates along with corresponding documents that included very personal information along with financial information such as account numbers, balances, and yes, even their social insurance numbers.

But, as you might have guessed, this email did not just get sent to the two of them… it was sent to the advisor’s entire list of contacts which included other clients of the firm.

The potential consequences of this small and unintentional action might just come back to haunt this advisor in many different ways… and can easily result in negative outcomes for everyone.

There are a lot of “costs” that can come with a situation like this including fraud, the costs of additional insurance (consumer protection), fines, and of course, being let go.

However, arguably, one of the biggest costs associated with this is trust… or rather the potential mistrust.

And not just from my sister-in-law or her family… but from everyone recipient on the receiving side of the email who opened it.

Believe me, I feel absolutely terrible for what transpired for all parties and for especially the advisor… I can only imagine the level of stress, anxiety, guilt, and concern that must have gone through their head when it first took place and likely still today.

And I’m sure that wasn’t the easiest of conversations to be had with the compliance and security officer.

But there’s a broader message here that needs to be echoed to all practicing advisors, independent firms, Broker-Dealers, and larger institutions…

Advisors, associates, assistants, and anyone else actively involved with sending, receiving, and managing critical client information and documentation… please, please, please think twice before sending over email.

Unfortunately, this easy but (potentially) costly mistake could have been avoided altogether.

WealthTech has come a very long way in such a short amount of time and exists to help augment the many mundane and routine tasks that advisors and administrate staff are tasked with.

And the above story is just one of the MANY reasons why FutureVault exists.

Security, compliance, efficiency, trust. That’s what we promise and that’s what we help you deliver to your clients.

As we always like to say… What happens in the Vault, stays in the Vault.

The next time you are considering sending sensitive documents and information over email or even asking your clients to send in materials your way, ask yourself if there is a better, more secure, and more efficient way.

I think you know the answer… and so do we.

FutureVault Request a Demo

Benefits of a Secure Digital Document Vault for Your Clients

What exactly are some of the main benefits of having a secure digital document vault to access, distribute and exchange critical documents with your clients? We’ve compiled a list of ten (out of several more) benefits that can bring immediate value to your firm, your advisors, and your clients.

1) Protection of sensitive information: Digital document vaults provide secure storage for sensitive documents such as financial statements, tax returns, and personal identification, ensuring that this information is protected from unauthorized access.

2) Compliance with regulations: A digital document vault can help financial advisors comply with regulations such as FINRA, IIROC, SEC, OSC, etc., by providing a secure and auditable location for storing client documents.

3) Data backup and disaster recovery: Digital document vaults provide a secure location for backing up important documents, ensuring that they can be recovered in the event of a disaster such as a fire or a flood.

4) Improved collaboration and engagement: Digital document vaults enable advisors to share documents with clients, other team members, and with third-party trusted collaborators to improve collaboration and many parts of the planning process.

5) Easy access to important documents: Digital document vaults provide easy and convenient access to important documents from any location, allowing advisors and clients to quickly find and view the information they need.

6) Streamlined workflows: Digital document vaults can integrate with other tools such as CRM and portfolio management software, streamlining workflows and improving efficiency.

7) Enhanced security and privacy: Digital document vaults use advanced security measures such as encryption and two-factor authentication to protect against unauthorized access, ensuring that client information remains private and secure.

8) Better data organization and information governance: Digital document vaults provide a centralized location for storing client documents, making it easy to organize and find important information.

9) Improved client service: Digital document vaults provide easy access to important documents, allowing advisors to respond quickly to client requests and provide better service.

10) Reduced risk of data breaches: Digital document vaults help protect against data breaches by providing a secure location for storing sensitive client information.

Creating the Ultimate Experience with Best of Breed Technology Solutions

How Wealth Management Firms can Create the Ultimate Experience with Best-of-Breed Technology

This article was published in collaboration with Mako Financial Technologies and PureFacts Financial Solutions.

Technology sits at the intersection of every area in modern wealth management.  

Technology’s “role” in the industry shows no signs of slowing down either. Actually, the opposite is true; we know first-hand through our collective relationships (PureFacts, Mako, AppCrown, FutureVault) that institutions and firms are embracing and investing in technology more aggressively. All with the common goals of creating a competitive advantage and delivering more value across the enterprise, to advisors, and to their clients. 

Arguably, one of the most significant changes we’ve seen over the last year comes down to executive buy-in. 

Executives, from firms of all sizes, might we add, are seeing the writing on the wall; and it’s hard not to, it’s everywhere. In order for their institution and/or firm to scale, create efficiencies, and attract and retain ideal clients (and their next generation), partnering with technology solution providers is a critical strategy.  

The question isn’t should firms embrace and invest in technology; that’s an absolute must. The questions that need to be asked and addressed are: 

  • ➜ How exactly should firms implement technologies? 
  • ➜ Where in the organization does technology create the most impact (or where is the opportunity)? 
  • ➜ What technology solution providers should firms invest in and partner with?
  • ➜ Do our solution providers “play well” together and can they connect disconnected workflow?  

The answer to those questions, as you might have assumed, is that… it depends.  

However, what does in fact ring true time and time again for any institution or firm tasked with a digital transformation mandate, is that going it alone–by prospecting for and working with technology partners in isolation–can lead to flawed implementation and financial risks.

The impact can be quite significant in the long term.  

Keep reading to learn more about how an integrated best-of-breed technology ecosystem can help your firm take on and roll out a digital transformation strategy with confidence.  

Recent Wealth Technology & Integration Findings

The rapid acceleration towards a full-blown digital-first era comes with its fair share of opportunities and challenges. Ultimately, what this means is that firms and institutions must re-evaluate the strategic areas of focus that will have critical implications on business outcomes. 

When it comes to implementing new technologies, one prominent challenge is the overwhelming amount of options available. 

In other words, analysis paralysis. 

According to the InvestmentNews Research 2022 Adviser Technology Study, the typical firm uses five different technology vendors, and a third of firms are looking to add several additional technology partners in the near future.  

Despite the intent to add to the tech stack, firms continue to experience the following operational challenges: 

  • ➜ 57% of advisors say the lack of integration between their core applications is the most significant pain point with technology 
  • ➜ 56% of advisors use individual solutions to build their technology stack (which serves as no surprise for the former number) 
  • ➜ Research from Cerulli Associates indicates that 94% of practice management professionals find limited technology integration creates productivity challenges  

In addition to the number of solution providers that exist in today’s market, the lack of connectivity and seamless integration continues to be a prominent challenge across the industry. 

As firms venture down the path of siloed technology implementations, we continue to see the rise of integration challenges, amongst other significant challenges which include resource allocation, financial risks, loss of productivity, and a poor client experience.  

One particularly interesting finding that surfaced with the mentioned study above is that integration, or rather the lack of integration between technology providers isn’t so much a challenge as is the lack of connectivity and integration into operational processes and client workflow to create a unified and seamless experience at every level of the organization.

Digital Transformation Affords Massive Opportunities  

Digital transformation is the adoption and integration of technology into all areas of an organization to drive measurable business outcomes. Common goals for its implementation are to improve efficiency, value, or innovation. 

Digital transformation affords institutions, firms, and advisors efficiencies and operating capabilities that they (and their clients) have longed for. 

When successful, digital transformation can lead to the below three outcomes in a number of different ways: 

1) Deliver tremendous value to clients (including the household and to their next-gen);

2) Lead to significant productivity gains across the front office and drive advisor-client engagement;

3) Create massive operational and compliance efficiencies to save time and money at the enterprise and head office level

First, digital transformation enables firms and professionals to create seamless, personalized digital client experiences that enhance the advisor-client relationship at scale. 

Second, digital transformation enables firms to meet information security and compliance regulation, reducing the time and effort previously spent on these activities.  

Lastly, digital transformation enables firms and their advisors to improve daily workflow via integration and automation, leading to focus and productivity where it matters most.  

Another major outcome (and advantage) of a successful digital transformation strategy is the ability to attract and retain top talent (notably Advisors), which can lead to a significant competitive edge in the market. 

Important reminder 💡: wealth management has always been a relationship-driven business; this isn’t going anywhere or at least not any time soon. When implementing technologies and digital transformation initiatives, it’s important to consider how technology can support relationships and not replace them. 

Other materially significant outcomes that result from digital transformation include: 

  • Cutting costs: Firms can benefit by significantly cutting costs via automating workflows, eliminating manual processes, and saving money on operating resources. 
  • Growing the business: Improving client experiences and building trust at scale can lead to referral flow and drive support in your communications and marketing efforts to ideal clients and families.  
  • Gaining scale and productivity: Successfully implementing a best-of-breed ecosystem results in massive operational efficiencies across all levels of the organization and creates the foundation for adding AUA/AUM without draining human capital.  

Leverage Best-of-Breed Solutions to Support Your Growth & Digital Transformation  

Even with the clear benefits, digital transformation initiatives are often challenging, time-consuming, and resource-draining.

Fortunately, you don’t have to go it alone.  

Technology providers that are well-versed in their respective areas of expertise and implementations — and with transformation initiatives in general — can play the role of a trusted partner. More than just a vendor, these providers are immersed in the space in which they operate and are able to help your firm streamline processes while providing support every step of the way.   

Good partners bring experience, expertise, and innovation to the table. 

Good partners don’t just understand digital transformation, they’re experienced in workflow configurations and understand when and where other solutions (partners) can play a role and plug-in.

Good partners will double down on their area of expertise and recommend other best-of-breed solutions for particular workflow challenges and problems rather than overpromising that they can do everything (more on that later). 

Collectively, our firms have found that the best-implemented technology solutions are driven by collaborative relationships where each partner is confident in sharing their input, perspective, and expertise.

Wealth Technology Best-of-Breed Ecosystem - Quotes from CEO's

Strength is certainly forged in numbers and success is a likely output when all hands are on deck.

Access the Guide💡: Read the 2023 technology vendor evaluation guide to make sure you are checking off the right boxes and asking the right questions with your prospective solution partners.

What Exactly is a Best-of-Breed Ecosystem? 

A best-of-breed ecosystem approach is a technology implementation strategy where firms deliberately move away from siloed implementations and/or do not rely on a single vendor to deliver technology. Instead, firms leverage an open technology architecture, enabling multiple best-of-breed solutions to work in collaboration.  

A best-of-breed ecosystem includes solutions that span the end-to-end wealth management delivery process across the organization and across all functional requirements to deliver efficiency and value at every intersection.  

Ultimately, it’s about bringing together the best solutions in their respective domains and areas of expertise; solutions that continue to demonstrate delivery of success, provide seamless integration and connection with one another and have experience working with one another.  

An integrated best-of-breed ecosystem implementation is a well-thought-out, defined, and a very strategic roadmap toward success that considers the functional requirements across the organization and has a deep understanding of the long-term vision for the future. Best-of-breed solutions de-risk digital transformation strategies and increase the likelihood of success, reduce the number of resources, technology learning curves, disconnected or disjointed workflow, poor client experiences, and on and on.  

Ultimately, it’s about future-proofing your business and eliminating friction points to maximize output and scale.  

The below flow diagram represents a high-level overview of an integrated Best-of-Breed Ecosystem in Wealth Management to meet current and future demands of back, middle, and front office teams, including clients and households.  

Wealth Technology Best-of-Breed Ecosystem
 *Note: the above diagram does not capture and illustrate the entire technology stack but rather is a real depiction of what your best-of-breed ecosystem could look like. 

But What About All-in-One Solutions? 

What we have witnessed and continue to see is that not only do all-in-one solutions have a slow adoption rate, most of the time these solutions fall short in many areas; mainly because those areas are not their area of expertise and are largely an after-thought or a basic feature with extremely limited functionality. 

When you think it through, it makes complete sense. Since when has trying to be everything for everyone worked out in the long run? 

While on the surface the concept is quite attractive, all-in-one solutions pose several challenges further down the road, resulting in more time, money, and resource allocation.  

And here’s the thing; where you think you might be saving money, you’re not. There’s often more commitment and full-time employment resources allocated to certain functional areas due to the limited functionality or lack of flexibility. Not to mention, the client experience is often less than ideal.  

Owning the “advisor’s desktop” doesn’t exist, unless it’s done through deep connections and tightly knit integrations with other best-of-breed solutions.   

The importance of having a well-thought-out, deeply integrated, and connected technology implementation rather than focusing on bits and bobs along the way, or one area of the business, cannot be stressed enough.  

Do you want the best digital document vault?  

Do you want the best fee and reporting solution?  

Do you want the best onboarding and KYC solution?  

Do you want the best CRM?  

Do you want the best financial planning software?

Do you want the best portfolio management solution?  

Your answer should be yes to all of the above. 

A Best-of-Breed ecosystem is the only way to get there.  

Moving Forward With Your Digital Transformation Strategy 

If your institution, firm, or practice is embarking on a digital transformation strategy, just know that you’re not alone. Best-of-breed solution providers like PureFacts, Mako, AppCrown, and FutureVault, are here to collectively partner with firms and deliver value, experience, and expertise where it matters most. 

Individually, best-of-breed solutions bring subject matter expertise, proven track records, and deep working relationships. When brought together and integrated, best-of-breed providers create an unparalleled ecosystem – giving you the efficiency of an all-in-one solution without compromising functionality or workflow experience. 

Future-proof your business for tomorrow, today.  

The Future of Document Management for Financial Services

The Future of Secure Document Management for Financial Services

In a previous article, we highlighted several flaws and challenges with the traditional approach to document management in financial services and wealth management.

While there are dozens of flaws and challenges with the way firms are managing documents and the systems and tools they’re using today, six (6) of them are all too common and lead to opportunities being left behind on the table.

The question you need to ask yourself is, do any of the below sound familiar?

❌ Traditional document management is typically built for one function or level within an organization and lacks the ability to efficiently manage document workflow and to consolidate back-office, front-office, and client documents within one single source of truth.

❌ Traditional document management often disregards the needs and the experience of your clients, making it challenging for them to securely store, access, and exchange critical documents with your firm and their advisor.

❌ Traditional document management lacks automation and bulk upload capabilities to share and distribute hundreds, thousands, or even hundreds of thousands of critical documents and statements without human intervention, Instead, it requires effort and full-time resources.

❌ Traditional document management is unstructured and falls short of meeting compliance requirements related to document retention, recordkeeping, and sufficient archiving. There is also often a lack of oversight and visibility by the head office and compliance officers (as a result of the first point above).

❌ Traditional document management lacks accessible APIs and can create massive integration challenges when it comes to connecting critical workflow across systems and levels of the organization.

❌ Traditional document management lacks the ability to securely connect and collaborate with third-party professionals and trusted collaborators within one secure location.

Whether one of the above, a few of them, or all of the above sounds familiar, the problems associated with each can undoubtedly wreak havoc.

Inefficient document handling workflow. An over-reliance on full-time resources spent filing and managing documents. A less-than-optimal client experience. Significant compliance and data privacy concerns by relying on email and insecure methods of collecting documents. And, most ultimately, difficulties in being able to scale and grow. 

The good news?

It shouldn’t and doesn’t have to be that way.

FutureVault Request a Demo

A Modern Approach: The Future of Document Handling with FutureVault

The future of document handling and management in financial services is being paved, in real-time, to provide firms with massive operational and compliance efficiencies at scale, as well as to deliver an enhanced digital client experience that extends and elevates your value proposition to and across the households you work with.

So what exactly does modern document management look like and how is it solving for the core flaws and challenges identified and mentioned above?

Let’s unpack this below.

✅ Modern document management is purpose-built for all levels of an organization and for every stakeholder

Traditional document management has long been delivered to one level of an organization, either with a focus on managing back-office and home-office documentation or being used strictly for the purpose of managing advisor or relationship manager documentation.

This is a very disconnected approach and leads to significant workflow challenges with respect to accessing, managing, and distributing critical documentation that need to be shared and accessed by multiple stakeholders or documents such as statements that need to make their way to clients.

Instead, firms should look to invest in and implement what we refer to as a multi-tiered solution, essentially meaning that there are different tiers (levels), roles, and types of users within each of the respective tiers to better improve document handling. For a multi-leveled organization which might include credit unions and banks, broker-dealers (investment dealers), Multi-Family Offices (MFOs), and even large Registered Investment Advisors (RIAs), this is the most effective, efficient, and compliant way to store, access, and manage enterprise and household documents in one centralized platform.

The concept of multi-tiering moves away from a one-way, inefficient, rigid document “feed” to a secure, collaborative, flexible, multi-way document exchange platform.

From both a compliance and operational lens, having every piece of information accessible within one secure environment addresses several workflow challenges.

A high-level overview of Multi-Tiering

✅ Modern document management delivers massive value to clients and households

“Where can I access last month’s statement?”

“How should sharing these documents with you and is it secure?”

“How can I get my accountant to provide you with these documents you are looking for?”

“Where should I be storing and keeping my Will?”

“How can our family manage personal and business documents without having multiple platforms?”

These questions, which may sound or look familiar to you, are commonly asked by investor clients to their financial advisors on a weekly basis.

The reason these questions are still frequently asked by clients is simple; the client’s experience in managing, storing, and accessing their documents is non-existent and ignored.

This is a massive oversight across the industry and one that leads to a less-than-optimal client experience while also making significantly more work for advisors and their support staff.

The modern approach and solution address this head-on by providing clients and their family members with a personal portal (or Vault) that makes it easy for clients to store critical information and documents like their Will. That makes it easy for clients to access their monthly statements in an organized way. That makes it easy for clients to securely exchange and upload necessary files and documents with (and for) their advisors in a structured way. And that makes it easy for clients to provide secure permissions to trusted collaborators including accountants, estate lawyers, family members, and wealth advisors, where these trusted advisors can easily deposit and manage documents on behalf of the client.

The bottom line is this, the households and families you work with should not have to ask you how or where to access their documents or feel like they need to jump through hoops to find them. Your clients should be able to freely access their critical documents and information across the household, across multiple entities, and across multiple geographies, any time, anywhere, at their convenience.

That is the power of providing your clients with a client-facing digital vault, the Personal Life Management Vault™.

✅ Modern document management creates efficiencies by automating document distribution workflow

Automation and the bulk delivery of documents play a massive role in modern document management, streamlining operational efficiencies across the organization.

The future of document management is one where most of the manual document handling workflows and tasks are no longer left in the hands of advisors, assistants, or back-office teams, and instead take work off of them, in a number of different ways including automatically delivering statements and account opening documents (and filing them in specific folder locations), making them available to the advisor, the households they serve, and also visible for head office and broker-dealers (investment dealers) for compliance.

Let’s take a look at monthly statements as an example. Statements provided by a wealth advisory firm traverse multiple tiers ranging from the custodian to the back office for enrichment, front office to ensure advisor visibility, and ultimately to the client or household. Thanks to automated workflows, monthly statements (from multiple custodians) can make their way directly to a client where those documents will get automatically filed into specific folder locations in a secure digital vault.

When you multiply that workflow by the number of accounts, clients/households per each advisor (or relationship manager), and throughout the year, the time and cost savings of manually delivering these statements compounds quite quickly.

For firms leveraging DocuSign or another email signature protocol platform for misc. documents where signatures are required, and any and all e-signed documents can similarly be automatically delivered to the back office, advisor, and clients, where they are filed in specific folder locations and made readily accessible.

By leveraging secure bulk uploads (SFTP) and integrations (with third parties and custodians), you can confidently move away from manual methods to now automatically delivering hundreds, thousands, and even hundreds of thousands of documents on a regularly recurring schedule, or a one-time upload, saving your institutions or firm countless amounts of hours and tens of thousands of dollars.

This is precisely how and why document distribution automation is so powerful.

✅ Modern document management is structured and puts information security and compliance handling at the front of everything

Information governance, data privacy, and meeting compliance regulation is significantly impacted by how your manage enterprise and client documents and the software you are using to manage them.

We are continuing to witness, as an example, the SEC and FINRA levying fines on firms for failing to meet compliance when it comes to document retention and record-keeping rules (Rule 17a4), which includes requirements such as storing records in a Write-Once-Read-Many (WORM) format.

Traditional and outdated methods and software are increasingly being used to manage critical documents, and are often non-compliant for structuring records, including client communications and vendor due diligence record keeping.

Modern platforms, such as our multi-tiered digital vault solution, meet data residency, data redundancy, document retention, and disaster recovery requirements while providing the flexibility and structure needed to effectively store, access, manage, and archive documentation required to be evidenced.

Additionally, head office and compliance officers have massive oversight when it comes to when documents are being delivered and to who, including the ability to track all document-driven activity in real time with compliance audit trails.

✅ Modern document management is built on Open APIs and is tightly integrated to connect the disconnected

The ability to integrate with existing tools and software is fundamental and critical to ensuring that workflow, across all levels of your organization, is deeply connected and that the experience for everyone is seamless.

Modern document management is tightly integrated with other critical technology stacks, often including CRMs, Portfolio Management Systems, eSignature protocols, and more.

By leveraging trusted and reliable Open APIs of modern platforms (like FutureVault), your firm can drive material efficiency to create and automate document-driven workflows, and bi-directional actions that streamline current processes and help your firm scale with confidence.

✅ Modern document management is deeply rooted in effective collaboration with Trusted Collaborators (third parties)

A major downfall of traditional document management is the inability to securely connect with and collaborate with trusted third parties without having to leave the platform or environment.

This becomes very significant for processes that include outside collaborators involved in wealth and tax planning processes and importantly, recurring examinations and audit reviews.

Yes, basic file-sharing functionality exists, but it’s hardly close to the solution that institutions and firms need.

The new, modern approach to document handling, affords massive operational efficiencies by empowering the collaboration process through secure permissioning, allowing Trusted Advisors (or Collaborators) to specific areas, with specific roles and permission within one or many Vaults. It’s also important to include that any and all Trusted Collaborator activity is tracked in real-time.

Let’s use two very common real-world examples to illustrate the power of this.

Scenario 1: It’s tax season and your firm works with a designated CPA to file taxes in addition to creating tax strategies for your clients. Rather than sending files in a zipped folder of clients’ files, your firm has the ability to permission in this account to specific areas (folders and/or sub-folders) within specific client Vaults that the accountant is assigned to. Now, this accountant can securely access all documents they have been permissioned-in to view and access in order to complete the necessary work. Any action that the accountant performs, including viewing, opening, and downloading documents, is tracked in real-time via the compliance activity trail which is accessible to both the client and your firm for transparency and accountability.

Scenario 2: The SEC is conducting an audit and you need to demonstrate that your firm has taken the right measures to evidence records related to client interactions and with the third-party vendors you are assessing. Your compliance department can now confidently provide trusted access to auditors so that they can access specific corporate-level folders where documentation and record-keeping exist as proof and evidence. This can streamline audits by eliminating back-and-forth evidence requests, while allowing you to, in real-time, keep tabs on whether or not folders and documents are being viewed and downloaded.