Monthly Archives: March 2014

Category: Conferences and Events, Industry Trends

Challenged with Board Reporting? You are Not Alone!


Board-Report---AA001282If you weren’t one of the over 50 early risers at our 7:00am panel entitled Board Reporting: Striking the Right Balance prior to last week’s ICI Mutual Fund and Investment Management Conference, here are some highlights.

I hosted an interactive panel session, comprised of industry experts from RidgeWorth Funds, Russell Investments, State Street, and Mintz Levin. We shared perspectives on the evolving needs of boards related to oversight requirements and enhanced compliance programs. One of the consistent board reporting themes is the need to increase transparency while balancing what is appropriate to report to boards. We discussed common industry challenges related to what to provide to boards.

  • Funds are challenged with balancing the diverse, disparate data that is available, determining if it is too much or too little; how to synthesize the information to provide key themes and trends
  • There is a lack of adopted industry standards or best practices around oversight
  • FICCA (Financial Intermediary Controls and Compliance Assessment) provides a standardized framework to assess  the controls performed by intermediaries on activities including transaction processing, shareholder communications, privacy protection, and anti–money laundering. FICCA can be beneficial but adoption remains low in relation to the overall number of larger dealers in the industry. FICCA is one piece of an overall compliance program. It is useful for internal assessments but is not necessarily a key discussion point with boards.

With our diverse client base, Boston Financial has a broad perspective on these challenges which we share when presenting to our client boards. Our expertise is nurtured from our client collaborations and furthered with our industry leadership through the ICI and NICSA. We remain active throughout the industry and participate in industry committees, working groups, and leadership consortiums. We collaborate with our clients on key operational, technology, and compliance initiatives and work with the industry as a whole.

Taking all of these challenges into consideration, we’d like to continue this important discussion, what are you hearing from your boards and how do you report to the board?  Please feel free to reach out to me our your relationship manager to share your thoughts or questions.

Category: Compliance, Industry Trends

Money Market Reform – Preparing for Change


Money-Market---122516953Money market funds, despite low yields and pending regulatory reform, continue to play a key role in our economy. They provide a safe haven for retail investors’ portfolios, stable cash management and liquidity for businesses and institutional investors, and an affordable source of short term funding for our states, cities and municipalities.

At Boston Financial, we service many of the largest money market fund providers in the industry. We work to stay abreast of industry trends and pending regulations to assist our clients through any changes.

Recently I attended the annual iMoneyNet Money Market Expo to hear the latest on money market funds and pending regulatory reforms. The keynote speakers included former SEC Chairman Troy Paredes and Nancy Prior, President of Fidelity’s Fixed Income Group.

While the industry has an understanding of the fundamental construct of the proposed rules, there is still uncertainty over which of the two alternatives or a combination will be released in the final regulation. And within each of those alternatives, there continue to be areas of concern driving further industry dialog with the commission.

With the SEC’s pending money market reforms, much of the discussion focused around the two alternative proposals and their potential impact to the industry.

Alternative 1

This proposal requires institutional money market funds to float their NAV. Retail and Government money funds would be exempt.

Alternative 2

The second proposal would allow for liquidity fees and redemption gates. Government funds would be exempt from this but could opt in voluntarily.

Mr. Paredes commented that each of the proposed alternatives aligned with the fundamental goal of the regulation, which is to prevent a run of shareholder redemptions. His position was that a floating NAV would ultimately be unattractive to investors and be less of a deterrent to a run on the fund, while liquidity fees and gates would perform better as a deterrent to mass redemption activity.

Another goal of the regulation is to provide for additional transparency, thereby reducing the first mover advantage. Mr. Paredes cited that the enhanced disclosure requirements already in place provide for sufficient transparency for investors.

Mr. Paredes also spoke on how capital market regulators and banking regulators have different perspectives and each has their respective issues to address. In his opinion, banking regulation encroachment on capital markets may not be the best approach.

Ms. Prior’s comments focused on the proposed alternatives and areas of concern. First, there is a large contingent that believes municipal money market funds should have been excluded from any structural reform. These funds represent a total of $270 billion and should not be considered a systemic risk.

Municipal funds maintain a high degree of liquidity, typically 2½ times the required 30% threshold. Also, they play an important role in providing affordable short term funding for states, cities and municipalities. Without this funding source, there could be potential increases in costs of services leading to increases in taxes.

Another concern is the SEC’s definition of a retail money market fund. The proposal defines a retail fund as restricting redemption activity to $1million per day per shareholder. A joint comment letter was submitted by nine asset management firms recommending retail money market funds be limited to natural persons. Implementing this definition would reduce operational complexity and programming costs for Funds, distributors and service providers. Also, acquiring the necessary shareholder documentation is already part of the Funds’ AML/CIP procedures.

Ms. Prior also had a few recommendations:

  • Reduce the proposed redemption fee from 2% to 1%, since based on their analysis, that should be sufficient to cover a Fund’s redemption costs.
  • Change the required 4 digit NAV to a 3 digit NAV
  • Resolve tax reporting issues before any proposal is implemented
  • Include a three year implementation period in the proposal.

Money market reform is coming, but what form and how investors will react is still unclear. It is expected that final regulations will be released later this year. At Boston Financial we are continuing discussions with our clients and industry partners to evaluate and assess how these regulations will ultimately change the way we service money market funds in the future.

Category: Social Media, Technology

Managing Relationships in a Social World


Social-Relationships---164565251“What do other clients do?” As a Relationship Manager at Boston Financial, this is one of the most common questions I am asked. Back in the day, this question would have caused me to spend hours navigating our organization by reaching out to others via the phone, seeking out subject matter experts through word of mouth, and/or sending countless emails with the hopes that someone would respond. The launch of our social intranet, The Hub, made this question much simpler to answer.

The Relationship Manager Community on the Hub is just that; a community of like- minded individuals whose main purpose is to bring value to and solve problems for our clients. By its nature, social media has evolved our community. As one of the initial communities established on the The Hub, it didn’t take long to see others adopting, utilizing and embracing due to the inherent advantages that social networking brings. Thus, began the shift to managing our client relationships in a social world.

Gone are the days of sending an email and waiting for a response. We all know how bogged down we can get with email and how difficult it can be to manage our corporate Inbox. Using the Hub has allowed us to more efficiently leverage, share and solicit information.

The Hub allows for rapid alert social discussions. If questions or updates are posted, that information can be pushed out to the Relationship Team immediately. This could include compliance updates, system enhancements or issues, meeting minutes, industry related articles, or general topics of interest to us, and our clients.  We have created our own corporate taxonomy within our community, which allows for information to be centralized into a “one stop shop” and helps us more efficiently locate and organize information.  Information is archived and searches can be done based on keywords or hashtags used in posts.

Another useful tool on the Hub is the ability to poll other Relationship Managers about the fund companies they manage. For example, we may post a question about a client’s web site, or how clients provide tax related information. Polling questions allow for collaboration and information sharing across our organization, no matter what city or building one is located. It also allows us to leverage the information provided by the poll if relevant to our specific clients.

Another useful benefit of the Hub is the ability to tap into the collective intelligence of our organization.  Each Relationship Manager creates and manages their own personal profile page. Within each profile are individual biographies, areas of expertise, listings of specific community memberships and colleague networks.  This allows the Relationship Team to network with peers and identify subject matter experts within our organization.  We are able to learn about others areas of expertise, and gain access to resources needed to assist with a client project or issue.

Like everything related to social media, the Relationship Manager community within the Hub continues to evolve and change the way we network and communicate. It has helped bridge the gap between what we know, and what we need to know. It has also fostered stronger relationships and rapport amongst the relationship team at Boston Financial. It has made the impersonal, personal. And, most importantly, with clients as the centerpiece of our community, it has allowed us to better manage our most important relationship, the client. So, we invite you to ask us “what do other clients do?”

Category: Conferences and Events, Innovation

Who are your “energy amplifiers”?


energy-amplifiers---121198434Paul English’s (CEO and co-founder of Blade, and co-founder of KAYAK) appearance at the Innovation Forum presented by the Boston Chamber of Commerce was not your typical conversation around innovation. I anticipated hearing about his techniques and wondered if it would be another presentation filled with some of the most popular buzzwords in business such as “innovative” which last appeared on a top ten list published by LinkedIn.

Paul explained how recruiting the right team is critical to fostering innovation. Paul believes culture and team dynamics are the keys to entrepreneurial success and is passionate about hiring the right people and fostering the right culture. Paul ranks Team, Customers, and Profits – in that order of importance, to building successful companies.

So what does he look for when hiring his team? Paul is focused on four key areas:

  • Bandwidth – Can they take on more responsibility?
  • Attitude – Key to this is listening skills. Paul’s experience is that hardcore athletes and musicians tend to have great listening skills.
  • Diversity – Ethnic, language, academic.
  • Lack of dysfunctional behaviors – This one is my favorite. Diverse personalities are valued. Annoying behaviors are not!

Paul promised his employees he will make them more productive and they will have more fun. He hates large, bureaucratic team meetings and encourages decision making at every level.  In exchange, he asks for their commitment to be their best and act as “energy amplifiers” for the firm. We can all recognize energy amplifiers as the people who increase the energy around them and the team is excited to work with.

Paul carries this concept when assessing firms for venture capital investing. He rates seed investment requests in three areas:

  • 70% Team mojo
  • 20% Market opportunity
  • 10% The idea

If there are great team dynamics and a realistic market opportunity, the idea has a much better chance of success.

My takeaway? Innovation can be more than a buzzword. With the right team creating the right energy, innovation happens!

Category: Social Media, Technology

Problems Well Defined are Problems Half Solved


Technology-terms---460102561Over the past couple of weeks Kristin Ferguson and Maura Linehan espoused the virtues of enterprise social networks and explained how a refurbished intranet can enhance corporate communication and efficiency. My job in this series will be to give you some insight into how we went about choosing our solution.

Before we started building our solution we thought it a worthy cause to spend a great deal of time truly understanding the problems we sought to solve. The more we discussed it, the more opportunities we identified, and the more our vision evolved. We wanted our corporate intranet to be much more interactive than your garden variety intranet chock full of corporate links. We wanted a central hub for all organizational and job specific content that was tailored for each associate. The business case was lengthy and detailed but essentially we determined that social for the sake of social would most likely land with a thud. In order to have a meaningful and actionable social experience, we needed to embed social capabilities within our day-to-day business processes. Below are some of the goals of the project:

  • Enhance organizational communication: With this tool we wanted to provide a platform for three-way communication. This included top down communication, bottom up communication, and cross departmental communication.
  • Implement a content management strategy: We knew we needed to make it easy for people to search for documents they needed rather than having them memorize where documents lived. We needed to consolidate all of the current file storage systems into one platform and institute a formal classification system. And we needed to implement a governance model to encourage content creation and growth in a controlled manner.
  • Enhance the business of doing business: Increasing efficiency was a big goal for us. We needed a solution for rapid application development for just in time business applications. We needed to convert unstructured business processes into structured measurable activities. We needed to create a consistent delivery mechanism for project related content and communications. And we needed to enable self-service reports.
  • Create a best in class enterprise search solution: The solution had to provide users a quick and easy way to find the tools and resources they need to do their jobs. This included content search, taxonomy browsing, people search, data search, and social search.

It was certainly an ambitious undertaking, but problems well defined are problems half solved. The good news is that these challenges exist in almost every enterprise environment and subsequently, the market has produced a myriad of solutions to help us solve them.

For us, SharePoint 2010 with the Newsgator Social Sites add-on was a sensible solution for a variety of reasons.  Most importantly, it met most of our requirements. This tandem was built specifically for the job at hand.

Our new social intranet, The Hub, launched in July of 2013 and adoption has been steady since. Each month, our associates consume approximately 1.25 million pages and those numbers are trending up as more and more departments matriculate their content and communications into the new platform.

In closing, I’ll share with you some of our lessons learned:

  • Social projects cannot succeed without senior management support. Rally the troops, demonstrate value and cinch up their support.
  • Engage your associates in the requirements gathering process. They know what they need better than IT does.
  • Governance! All content should be owned by the business and managed appropriately. IT can enable this, but business involvement is critical.
  • Don’t wait for perfection. Iterate often. You’ll learn quickly what does and doesn’t work.
  • Don’t ignore search! One fourth of your knowledge worker payroll is spent creating and handling content. Search makes those expensive efforts findable, reusable, and prevents the proliferation of stale content in your computing environment.

Good luck with your efforts to introduce social into your organization. Effective uses of these tools in the enterprise truly can yield some impressive results when planned and executed properly.

Read the other posts in this series: