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New Security Software Eases Compliance for RIAs

By Murray Coleman September 30, 2014

Despite its promise, cloud-based computing has raised security issues for many advisors. Even after they find relatively secure applications, compliance requirements can throw another wrinkle into the process.

Just ask Amir Barar, founder of ICS Wealth Management in San Francisco. In the past, he’s had to piece together dozens of programs from a host of different companies to make sure he was complying with all the data storage rules set in place by his broker-dealer, LPL Financial. His firm has also had to buy special servers and hire consultants to integrate his security software with everything else.

But more than a year ago, Barar started beta-testing Unify for RIAs, a new suite by San Mateo, Calif.-based software developer Entreda. The cloud-based package — a bundle of 15 apps to streamline back-office security software — goes on sale to the general public today, with prices starting at $30 a month. According to Entreda, it supports desktop computers and tablets; a mobile phone app is expected early next year.

“It’s unique in that this security software is built so that advisors can easily customize it to their own broker-dealer’s compliance standards,” says Barar, who declined to disclose his firm’s assets under management. He estimates integrating security systems will cut the time his staff spends monitoring each one individually by up to 20%. “It’s a lifesaver in terms of making our office more efficient and cutting our IT costs,” he says.

Sid Yenamandra, Entreda’s CEO and co-founder, says several groups of advisors had asked the firm to build a security software package around their industry’s regulatory needs. The firm started with LPL Financial’s systems, he says, “but we’ve been talking to advisors across the country affiliated with a number of different independent networks.”

Joe Pearson, chief technology officer at Financial Services Network in San Mateo, Calif., expects about 200 advisors he works with to use the system. The LPL-affiliated firm serves as office of supervisory jurisdiction, or OSJ, for 250 FAs. Formerly, these advisors had two options: They could check each computer manually or string together diverse software programs themselves. It’s not uncommon for a small practice to spend anywhere from $1,500 to $2,000 a month to maintain such security systems, according to Pearson. “We’re finding that with this package, even a small advisory firm doesn’t have to become a huge practice in order to support a robust IT system,” he says. “It’s a much more practical way to handle security protocols for smaller offices and at a fraction of the costs.”

But it’s probably worthwhile for advisors to shop around, says William Chettle, executive vice president of marketing for San Jose, Calif.-based Loring Ward. The firm provides mid- and back-office outsourcing services to more than 2,000 advisors.

He hasn’t seen the Entreda package yet, but Chettle says many back-office specialists offer a full set of security and compliance tools. “Security integration is pretty standard for outsourcers these days,” he says.

Still, he admits security requirements present “a lot of gray areas” for advisors — particularly regarding issues of remote access and sensitive client documents held on different investment platforms. Chettle suggests advisors who want to shore up their security check with their broker-dealers before making any purchases. After all, he points out, “security and back-office support systems today go hand-in-hand” with everything from trading platforms to investment research.