Immediate Requirements
What do brokers need to do right now?
The most basic immediate requirements are to evaluate your current systems, identify the gaps between your current technology´s capabilities and the new reporting requirements, and make a plan to close the gaps. Most firms will need some technology upgrades; many will need to consider major upgrades or replacement. Two decisions confront you:
This analysis quickly leads you to the “build or buy” decision. You simply cannot comply with the new requirements without substantial automation of something that, right now, for you may be a labor-intensive, research-intensive, high-cost response to individual customer inquiries.
To meet the mandated schedule, all but the largest firms likely will have to buy some or all of the needed technology or outsource the services entirely. In so doing, they benefit from the vendor’s economies of scale --in development, in execution, and in the depth of subject-matter expertise a vendor can offer.
Another argument on the “buy” side is that since these reporting requirements are required of all brokers, meeting them cannot be seen as a “differentiator.” Most firms will decide to deploy their own IT resources on their own differentiators, not on common requirements.
But a “buy” decision requires placing your trust in a vendor to meet the reporting requirements, to keep pace with changes and clarifications in the future, and to maintain acceptable auditing, system response, uptime, compliance, backup, and security. Sometimes large vendors create “one-size-fits-most” solutions that may not fit well with your internal processes or your current portfolio accounting systems.
If you are a very large firm, you may conclude that you’re better off doing it yourself. Smaller firms may fear that their concerns will come in well behind those of the bigger players. And you still have to integrate even the most suitable off-the-shelf package or service with your current systems, so you inevitably incur some internal IT cost whichever way you go.
- Build or Buy?
- Satisfy at least cost, or leverage to provide other related services in the process?
This analysis quickly leads you to the “build or buy” decision. You simply cannot comply with the new requirements without substantial automation of something that, right now, for you may be a labor-intensive, research-intensive, high-cost response to individual customer inquiries.
To meet the mandated schedule, all but the largest firms likely will have to buy some or all of the needed technology or outsource the services entirely. In so doing, they benefit from the vendor’s economies of scale --in development, in execution, and in the depth of subject-matter expertise a vendor can offer.
Another argument on the “buy” side is that since these reporting requirements are required of all brokers, meeting them cannot be seen as a “differentiator.” Most firms will decide to deploy their own IT resources on their own differentiators, not on common requirements.
But a “buy” decision requires placing your trust in a vendor to meet the reporting requirements, to keep pace with changes and clarifications in the future, and to maintain acceptable auditing, system response, uptime, compliance, backup, and security. Sometimes large vendors create “one-size-fits-most” solutions that may not fit well with your internal processes or your current portfolio accounting systems.
If you are a very large firm, you may conclude that you’re better off doing it yourself. Smaller firms may fear that their concerns will come in well behind those of the bigger players. And you still have to integrate even the most suitable off-the-shelf package or service with your current systems, so you inevitably incur some internal IT cost whichever way you go.
Key Considerations
Satisfy or leverage?
A second important choice is whether to attempt a bare-bones, compliant solution at the lowest cost, or in the process to leverage the new data and record-keeping to provide additional services that could help you differentiate your own services. These service opportunities range from an integrated, enhanced performance reporting solution, to providing information that assists wealth managers in offering tax-efficiency advice.