Compliance Fears Driving Record Keeping For Wealth Managers

by Amanda Banks, Investors Offshore.com

16 November 2006

According to a survey conducted recently by Objective Corporation and published this week, over 65% of companies operating in the rapidly growing wealth management sector, comprised of stockbrokers and private client management firms, have cited compliance as the key market driver for the adoption of an effective record keeping process.

The new regulatory framework in the sector including the Capital Requirements Directive and MiFID - which comes into force in January 2007 - as well as other ongoing FSA requirements, were all cited by respondents.

With records management rapidly becoming a high priority on many company agendas as a result of recent corporate wrongdoings, efficient record keeping is being viewed as key to complying with legislation and to restoring the trust of stakeholders, especially customers and investors.

Other key findings of the survey included that:

• 35% of the sample stated that the need for rapid access to - and quick retrieval of - information was one of the key issues affecting their record keeping decisions.
• This is largely prompted by the pressures created by ‘legal discovery’ – whereby an organisation may be required, as part of a legal process, to produce all records that relate to a particular client. In a corporate world that faces the increased threat of litigation, organisations need to develop a sound, policy-driven records management strategy that encompasses all corporate information.
• A further 35% stated that one of the key reasons they would adopt an effective record keeping solution was the return on investment garnered as a result of space saving and other costs associated with the storage of paper records.
• 65% of respondents rated their readiness to meet new records management legislation as less than 50%.

Speaking with regard to the findings, Gary Fisher, COO of Objective Corporation's European division, stated that:

“It is important to remember that only relevant documentation needs to be retained. The natural human response is to keep everything and this is not an effective policy. The second impulse, in response to the growth of scandals, is to do the opposite and retain as little as possible, and once again this is simply not a viable policy."

"The basic premise of so much recent legislation is to protect investors and customers alike by improving the accuracy and reliability of corporate auditing processes and financial disclosures. It is within this context that organisations must operate.”

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