It is well documented that cybercrime attacks are rapidly on the rise, especially against small businesses. And as cybercriminals continue to develop increasingly stealthy and sophisticated tactics, unsuspecting employees are among the most frequently targeted victims.
Business Email Compromise (BEC) schemes, also known as CEO fraud, are a cybercriminal favorite. Through a successful phishing scheme or by simply visiting a public domain, scammers typically familiarize themselves in advance with knowledge of a target business’ policies and management roles. They will often then attempt to first gain the trust of an employee before eventually duping him or her into transferring fraudulent payments.
Using any inside information they’ve obtained, scammers will generate a fake email designed to appear coming from a senior management member requesting a financial transfer be made to a private account, while promising to send an invoice at a later time (which never comes). The scammers will often even ask victims if they are in the office or sitting at their desk before engaging in a discussion on how to complete a transfer. Once this occurs, the money of course does not get transferred within the organization, but rather into the accounts of online criminals. According to the FBI, CEO scams have resulted in an estimated loss of $3.1 billion.
To avoid becoming a victim of business email fraud, always be suspicious of emails demanding action not in line with your company policy,including communication appearing to be sent and authorized by senior management. Users are also urged to not click Reply if they believe the message looks suspicious. Instead, write and send a new message directly to the known corporate address of the person claiming to have sent the original message. This will remove any potential scammer from further communication.
Imagine finding yourself the guilty culprit of any of the following embarrassing, even humiliating, real-life situations…
- Emailing confidential personal or salary information to your entire firm by accident.
- Sending a job offer to the wrong person.
- Making an inappropriate remark about a supervisor or a client and accidentally emailing your message to the maligned individual.
- Typing a crude or off-color joke intended for a colleague, but mistakenly sending it to your entire department.
- Inadvertently distributing an internal sales strategy to an outside email list which includes addresses of some of your firm’s competitors.
Though these are some extreme cases, it all still boils down to practicing proper email etiquette, an essentiality in today’s competitive business environment. Here are some key points to consider when composing and sending emails:
- Email communication vs. phone call. Ask yourself if email is the most appropriate method of communication for contacting your desired recipient. In other words, does the email contain sensitive or confidential information? Would your manager, supervisor, or compliance office approve of the email if they were to see it? Or would it be more prudent to simply pick up the phone and call the recipient directly?
- Respond promptly. It should go without saying that providing exemplary customer service requires responding to your client emails in a timely manner. Most firms strive to reply to email inquiries within hours, the same business day, or by the following business day at the latest. Slow response times not only can make you appear unorganized, uncaring, and/or negligent, but can also reflect poorly on your company and may lead to being outperformed by competitors that better understand the importance of high communication speed and efficiency.
- Carefully consider the subject line. It’s crucial to provide a clear, direct, and concise subject line for two main reasons: 1) It grabs the recipient’s attention, and 2) It helps summarize the email content and allows recipient(s) to better determine whether it’s worth their time to open the email and read further (i.e. “Meeting date changed”, “Quick question about your presentation”, “Suggestions for the proposal”, etc.). Letting readers know how you are addressing their concerns or business issues should be clearly communicated in the subject line.
- Use common courtesy. All business related emails should open with an appropriate and courteous greeting (“Hello”, “Hi”, “Good morning/afternoon/day”, etc.) followed by the intended recipient’s name (unless it’s a group email). The email should also conclude with a polite salutation (“Thank you”, “Sincerely”, “Best Regards”, etc.) followed by your name. Not doing these simple things can lead to your emails being misinterpreted as demanding or terse in tone. Make it a regular practice to imagine how the recipient might intend the tone of your message.
- Keep messages clear and as concise as possible. This includes keeping sentences short and to the point, while the body of the email should be direct and contain all pertinent information. Unlike traditional written or typewritten letters, however, it costs no more to send several emails than it does to send just one. So if you need to communicate with a colleague or client about a number of different topics, consider writing a separate email for each. This not only can this help better organize your messages for future reference, but also allows your correspondent to focus and reply to each topic, one at a time.
- Demonstrate professionalism. Remember that your emails are a reflection of your professionalism, values, and attention to detail. As an educated professional representing a company that’s providing products and services to paying clients, your email communication should reflect this. This means typing complete sentences and using proper grammar, punctuation, and sentence structure. Avoid abbreviating words… and always be sure to proofread and use spell-check! Capitalize letters where necessary but never type in ALL CAPS as this can be misinterpreted as shouting. Good communication instills further confidence in clients and encourages others to want to do business with you and your company.
- Think twice about clicking “Reply All”. Use this button with careful discretion and consider carefully whether everyone copied on the email really needs to be aware of your reply. Remember, your colleagues already spend a significant portion of their day reading, composing, and sifting through emails. No one wants to have to read multiple back-and-forth emails from multiple people over an issue that has nothing to do with them. So please be respectful of these recipients’ time by not including them in group replies if no further action is needed from them. Not to mention, refraining from using the “Reply All” button also helps prevent some potentially disastrous situations like the ones that began this blog!
For advisor use only.
By now, you are likely well aware that new SEC-approved money market reform rules will soon be implemented. The regulatory environment is changing daily as new reforms and rules are expected to carry a significant impact on the qualified plan space and open architecture platforms. These changing regulations create new and unique challenges and opportunities from a compliance, product, sales, operations, and technology perspective.
Even with the wall-to-wall financial news coverage regarding money market reform, you may still have lingering questions. Michele Coletti, Sr. Vice President of Mid Atlantic Retirement Plan Services, recently compiled answers to some important and frequently asked questions concerning money market reform. Please click the button next to the questions below to view a detailed explanation.
What is money market reform?
In 2014, the SEC approved new rules under the Investment Company Act of 1940, amending the operation of money market mutual funds. The SEC is requiring Institutional money market funds to sell and redeem shares based on the current market-based valuation of the portfolio, rounded to the fourth decimal place. The rule also allows fund boards new flexibility to control heavy redemption demands to protect remaining shareholders. The goal of these new regulations is to preserve the integrity of money markets as instruments of liquidity and to ensure that the valuation of each fund is transparent to investors.
What are the new classifications of money market funds?
Effective on or before October 14, 2016, each money market fund will be required to classify itself as one of the following: Government, Retail, or Institutional. The classifications are tied to the underlying portfolio.
Government funds must hold 99.5% or more of their assets in cash or government based securities. Retail money markets will be restricted only to beneficial owners who are natural persons. Institutional funds are funds that do not qualify as retail or government.
What is the effective date?
What are the implications of the fund classifications?
Each fund’s classification has impact on shareholders, custodians, dealers, and recordkeepers. First and foremost, the classification dictates the requirements for stable versus floating NAV (referred to as “FNAV”), as well as the imposition of liquidity fees and gates.
|Money Market Funds|
|Floating NAV (FNAV)||No||Yes||No|
Secondly, the classification impacts the types of entities that can hold a position within the fund. Account eligibility is based on social code (account type), as compared to the money fund classification. In the case of retirement plans, the SEC has ruled that participants are the beneficial owners and natural persons; therefore, retirement plans are eligible to hold Retail funds. However, Retail funds are subject to fees and gates, making them potentially complex investments for daily valued defined contribution plans.
When will I learn the classification of each money fund?
Mid Atlantic is being notified separately by each issuer as the issuer’s board and portfolio managers evaluate accounts under management, portfolio composition, and future strategy. Mid Atlantic is evaluating these notices and working with the fund companies to identify accounts that might require liquidation or mapping to alternative investments. Your relationship manager will then be in touch to provide support.
Mid Atlantic has modified the TNS investment screener to validate prospective account setups against money market category and account social code to identify eligibility. Mid Atlantic has also rolled out new reports to identify holdings that will require liquidation or transfer into alternate securities or products.
When will the new TNS money market categories be populated?
What if my plans are holding positions in funds that will be ineligible on or before 10/14/16?
Since account eligibility is based on a comparison of social code and fund category, some existing accounts will become immediately ineligible to hold positions they have already funded. In those scenarios, we see a variety of potential outcomes:
- Some funds will make advance notice of force liquidations and then close the ineligible accounts on a set date.
- Some funds will map ineligible accounts into a “like fund” that supports the social code.
- Some funds will leave the account open but delist from NSCC, thereby creating a pseudo-close where no electronic trading, pricing, reconciliation, or dividend processing can occur, requiring voluntary liquidation of the account. As Mid Atlantic is notified of funds taking this approach, we will get in touch quickly to allow you as much time as possible to wind down the position. As of today, six issuers have delisted Institutional funds: Wells Fargo, Fidelity, Federated, JP Morgan, BlackRock, and Goldman Sachs. Those notices have been distributed as Service Announcements and are also posted on the MATC homepage under the Announcement section.
How many NAV strikes a day are permitted for floating NAV funds?
Will the Mid Atlantic price file contain multiple strike prices?
So how do I know what price each money market trade will receive?
Each institutional money market trade with a floating NAV fund will receive the strike price of the next NAV computation after receipt of the trade. For intraday trades, a strike price of 9:00 a.m. might be transmitted to NSCC at 10:30 a.m., and a strike price of 11:00 a.m. might be transmitted to NSCC at 12:30 p.m. A trade received by the fund at 10 a.m. would receive the 11:00 a.m. strike price.
Institutional fund trades sent during the evening hours may receive either the end of day NAV strike or the first NAV strike of the next business day, subject to the rules of each individual fund per its prospectus filing. That is why institutional fund strike times are also referred to as trade cutoff times. For this reason, we highly urge you to NOT perform price-dependent processing for any institutional money market positions.
Government and retail funds will continue to price based on end of day NAV.
When would a liquidity fee or gate occur?
How would I be notified of a fee or gate?
At this time, there is no automated mechanism for a fund to notify the industry of a fee or gate. Notification to Mid Atlantic will occur via call or email from the fund. Mid Atlantic will in turn send notifications and alerts as soon as the details of the fee or gate are confirmed with the fund.
The notice from the fund will usually be retroactive to prevent a run on the fund (i.e. an 11 a.m. gate could be announced at 11:30 a.m.), although funds can optionally announce an end of day effective time.
How do funds impose fees or gates?
When trading in funds that have fees or gates, the platform sets a flag on each sell order indicating to the fund whether the fund should impose the fee or gate or whether the intermediary will be calculating the fee and imposing the gate at the beneficial owner level. Funds also retain the right to “hard gate” a fund and ignore the intermediary’s request, thereby rejecting all sell trades to prevent a run on a fund.
The imposition of a fee or gate is determined relative to the timestamp when the trade is “in good order”. The definition of “in good order” is discretionary and determined based on who is assessing the fee or gate.
What timestamp will be used on money market liquidations?
What happens if a fund assesses a fee?
Why will Mid Atlantic not permit recordkeepers to use their own timestamping and calculate their own fees?
The new rules impose considerable compliance oversight if a contracted dealer such as Mid Atlantic allows underlying firms to timestamp orders and to independently compute liquidity fees or assess gates. Liquidity fees must be estimated on trade date, before the next NAV strike, with proceeds to be delivered to the funds via wire (outside NSCC settlement) on the next business day. Due to the extremely manual processes of liquidity fee management, and the extensive oversight by the funds of any fees not computed by the fund, Mid Atlantic is standardizing all trades as fund-assessed.
Each underlying Mid Atlantic client performs recordkeeping on many different software systems and many versions/releases of those systems. Given the potential variances across underlying firms based on software systems and internal controls, allowing an underlying firm to monitor fees and gates is not feasible since Mid Atlantic will be subject to very stringent audit controls and oversight by the funds specific to money market trading.
What is the impact to same day/cross family transfers and exchanges?
Will Mid Atlantic custody or trade money markets in a super omnibus account?
What if my firm is a bank/trust with omnibus positions?
What is the impact to fee disclosures and fact sheets?
What other system changes should I anticipate with money market reform?
Note that money market NAVs can now run to four decimal places, thereby impacting calculations throughout all trading, transfer agency, and sub systems for confirmations, dividends, transfers, and other activity. Reports will also require updating to accommodate the longer price precision.
All account valuations will be performed at end of day NAVs, but accounts with FNAVs may have specific trades performed at values not reflective of the end of day NAV.
Mid Atlantic will not edit any inbound or outbound client file layouts. Some systems already read the “fee” field in a confirmation record and others do not. If you remain in funds subject to fees and gates, please consult with your system vendor to determine if your confirm import will recognize a liquidity redemption fee in a confirmation or settlement record.
What happens next?
One alternative platform solution available through Mid Atlantic Trust Company (MATC) to help accommodate these new reforms is DepositxChange™, an FDIC insured service. DepositxChange™ seamlessly connects 401(k) participants and banks to provide participants with a cash deposit within their retirement account, whether it is part of a qualified defined contribution plan space model or a standalone investment.
We invite you to read an excellent article written by John Humphrey, COO of July Business Services, a valued business partner of Mid Atlantic, discussing the new SEC-approved Money Market Fund rules taking effect on October 14, 2016.
In the article, Humphrey urges advisors and plan sponsors to not delay with choosing a new money market fund or cash investment solution prior to the effective date.
(Click here to read Money Market Rules for 401(k) and Other Qualified Plans.)
As an alternative solution, MATC now provides an FDIC insured service called DepositxChange™, which seamlessly connects 401(k) participants and banks to provide a cash deposit solution within the participants’ 401(k) accounts. This can be used as part of a qualified defined contribution plan space model or as a standalone investment.
Please click the hyperlink below for additional details:
If you have any questions, you may contact your Mid Atlantic relationship manager by calling (800) 693-7800.
Mid Atlantic Trust Company is very excited to be featured in the latest issue of 401(k) Specialist Magazine, the only publication exclusively dedicated to retirement plan advisors. In it, John Humphrey, COO of July Business Services, has penned an article discussing the latest technology currently available for efficiently offering separately managed accounts in 401(k) plans, including Mid Atlantic’s ModelxChange® platform.
Mid Atlantic is proud to share an outstanding partnership with July Business Services as well as 3D Asset Management, a portfolio manager also highlighted in John’s informative article.
Please click here to read the article in its entirety.
Also, if you are not yet a subscriber to 401(k) Specialist Magazine, we invite you to become one by clicking here.
Mid Atlantic would like to invite you to click here (or copy and paste the following URL address into your browser: http://pubs.royle.com/publication/?i=272855) to read the latest issue of 401(k) Specialist magazine on your desktop, tablet, or smartphone at no charge!
When it comes to ensuring a secure retirement for hardworking Americans in a dynamic marketplace, 401(k) Specialist is the only publication devoted exclusively to equipping retirement plan advisors with the vision, specialized knowledge, and cutting-edge technology vital to their success. Simply click here to sign up for your FREE subscription today (or copy and paste the following URL address into your browser: https://online.icnfull.com/for/?list_source=K5BE1MAG).
For more information about Mid Atlantic Trust Company’s wide range of trust and custody solutions for retirement plans and other accounts, please contact John Wight at 800-693-7800.
No matter what your role in the process, there are numerous steps involved in setting up a retirement plan. From acquiring documents and signatures, to selecting an advisor, to choosing funds, it isn’t always easy to get your ducks in a row. Still, you’ve gone through the steps and your client is happy because his or her plan is up and running… and trading! And then the client wants to change the previously selected broker-dealer. Or the lease is up and he or she decides to change offices.
Luckily for you, these updates can be made easy with the help of your admin team at Mid Atlantic. By following some rules of thumb regarding updating plans, you can not only smooth the transition for you regarding paperwork, but also put your clients at ease because their plans will still function properly despite any changes they may request.
What are B51s?
A B50 is a paper or electronic request to establish a new account. A B51 on the other hand is a paper or electronic request to update the fund registration of an existing account. B52s are a whole different ball of wax, which we will save for another day.
Types of B51s
There are several types of plan updates that can be processed via B51. Registration changes are the most common as trustee, plan name, address, or tax ID number can change somewhat frequently. Depending on the plan in question, these updates may or may not be sent out via B51. For example, in the event that Mid Atlantic is the custodian, the fund companies do not need to know that ABC Company is moving buildings, as the funds are registered with Mid Atlantic’s name and address. On the other hand, if Mid Atlantic is the custodian and the plan name is changing, that is something the funds would need to update as it is part of the registration needed for the plan to trade.
The second type of B51 that we commonly process is broker updates. This is more cut-and-dry and does not matter what type of plan you have. If your broker or registered investment advisor information is changing, we will send it out to the fund companies.
What is required to make an account update?
There is documentation required, depending on account type:
- For registration updates, we need a corporate resolution for trustee or plan name updates, or a document on company letterhead stating the change for an address update.
- Should the plan be reporting only, these documents are required and must be signature guaranteed. The same applies for plan name updates for custodial plans.
- Broker updates can be made by submitting the MATC Broker Update form with the required information, detailing a FINRA registered broker. This should be signed and medallion signature guaranteed as well. Mid Atlantic can accept a document without the guarantee. However, should we need to send a manual version to the fund companies, they will require the medallion.
How do we double check this?
Mid Atlantic has processes in place to help ensure account updates are made in our system, tracked at the fund company, and verified to ensure they have been completed. We have multiple teams heading up this process to check these updates daily and make 2-3 electronic attempts, followed by a fax, and then a phone call to inquire if the fund isn’t changing their system records according to the instructions submitted. Most electronically sent B51s are accepted without issue. Some fund companies are trickier than others, but it is of course vital we are sending out the correct information in the first place. Otherwise, they may not update or, worse, they will update incorrectly.
What happens if it’s wrong?
The good news is those “multiple teams” described above are there to make sure we check, double-check, and triple-check to help make sure that this information is right. However, all submissions are based upon what our clients send over to us, so it is important that information is verified beforehand. If the information is wrong, it could impact trading and/or 12b-1 commission payments. Both can cause issues down the road. It’s better to be safe than sorry, so a good rule of thumb is to always double-check an update before sending.
Where can I view this information on the Mid Atlantic website?
There are two ways you can view updates or the current status of an update within our system. If the update is for plan registration, this can be viewed in our system on the plan’s general profile page. If you are interested in a broker update, you can view this information on the plan’s broker review page. To see the progress at the fund level, one can view the plan’s registrations page and browse through the update status for each fund company. This will allow you to see which funds have updated and which have not.
Compiled by Alexandra Cairone
Financial advisors are now making greater use of social media than ever before, even compared to just one year ago. This is the underlying finding of an in-depth 2014 study conducted by Putnam Investments of financial advisors’ social media practices nationwide.
Among the more than 700 financial advisors surveyed across the United States, 66% of those using social media for business indicated that social media network initiatives have helped them gain new clients, up sharply from 49% in the previous edition of the research. Advisors who have acquired new clients through social media are reporting a median gain of almost $2 million in new assets in the past year, close to triple the level of last year’s respondents!
LinkedIn remains the number one business site of choice as 55% of advisors regard it as a primary network. Meanwhile, Facebook usage has surged on a year-over-year basis to 24%, while Google+ and Twitter are also gaining significantly in popularity. Overall, a typical financial advisor employing social media for business is active on an average of three social networks.
Some additional statistics revealed through the study:
- 75% of all advisors are using social media in some capacity for business.
- Female advisors report higher usage of social media for business than male advisors (82% versus 73%).
- Smartphones are the access device of choice for advisors under age 30, about even with stationary or docked computers which are strongly preferred by the age 50+ set.
In identifying a need among financial advisors to understand the emerging importance of social media as a business-building tool, Putnam has developed key practice management offerings in this area, including: providing best practice seminars to advisors on use of LinkedIn and other social platforms; a series of online resources and tools; one-on-one training and continuing discussions; creation of a community discussion via the firm’s LinkedIn group; and video vignettes on Putnam’s Advisor Tech Tips blog.
Full results of Putnam’s 2014 social media survey can be accessed by clicking here. For more information about social media and to inquire about social media training, please visit Putnam’s Social Media Center.
Meanwhile, Mid Atlantic registered reps are also encouraged to visit the Rep Neighborhood website for more information on our social media policy.
As technology advances, so do the tools and schemes that cyber criminals use to steal from clients. Wire fraud, identity theft, and e-mail scams are becoming increasingly sophisticated and continue to threaten data security for broker-dealers and financial advisors at a rapidly growing rate.
Last month, internal research conducted by Fidelity Investments® reported observing a five-fold increase in successful cyber fraud attempts on a year-to-year basis. This is a major concern for the entire financial industry. Therefore, if you have not yet performed a careful examination of whether your firm’s security policies and procedures are robust enough to withstand cyber attacks, you should strongly consider doing so now.
Over the past year, National Financial® has proactively pursued an awareness and education campaign on this topic to help accomplish two goals: communicating the increasing risk of cyber fraud, and empowering advisors with best practices to help protect their firm and their clients.
Please take this opportunity to click here and review the attached whitepaper from National Financial to help protect your firm and clients from cyber fraud. This guide includes valuable insights and actionable steps to consider and assist you with combating these threats.
If you have any questions, please contact Paul Edwards at firstname.lastname@example.org.
Meet Greg Bakke, Co-Founder and President of Expand Financial. As a Mid Atlantic Capital Group business partner and registered representative of Mid Atlantic Capital Corporation, member FINRA/SIPC, Greg is an independent financial advisor who specializes in defined contribution and defined benefit retirement plan advisory services, including 401(k), 403(b), 457, and IRA accounts. His background in open architecture and technology led him to recently develop a comprehensive, cost efficient retirement plan solution called Ready Go! 401(k), which provides clients with a thorough portfolio review, a strong investment lineup, is fully transparent in terms of fees, and supports the plan sponsor in their fiduciary role.
Greg was born and raised in Denver, Colorado, and attended the University of Colorado at Boulder where he earned a Bachelor of Science degree in business administration with an emphasis in finance and accounting. He also holds a Master’s of Science degree in computer information systems from the University of Denver.
Greg’s background includes over 20 years of experience in finance and technology. He has spent the past 15 years performing various functions for multiple institutional custodians servicing independent record keepers, third party administrators, and registered investment advisors. Greg previously held senior management positions as Chief Technology and Chief Information Officer at Fiserv Trust Services and Trust Company of America (TCA).
After having spent a number of years building and managing “back office” technology infrastructures to support the financial advisory and administration businesses of his employers, Greg formed Expand Revenue Management LLC in 2009. Through this firm, he focused on the ever increasing fee disclosure and transparency needs of the retirement plan industry. With the introduction of 408(b)(2) and other continued DOL ERISA regulation, Expand is uniquely ahead of the marketplace in helping assemble a solution to aid with compliance to the new regulations. Greg is also part of the advisory function behind eFiduciary Advisor, another technology-based solution, and acts as an Investment Consultant 3(21) or Investment Manager 3(38) to retirement plans.
We recently caught up with Greg Bakke to get an inside view regarding Ready Go! 401(k) and his partnership with Mid Atlantic:
What motivated you to create Ready Go! 401(k)?
Retirement plan sponsors need help, advisors need help, and participants need help, all to be successful optimizing the retirement plan. ReadyGo! makes it easy for all three to be successful. We felt, especially in the small to mid-plan market, that good solutions using open architecture exist but constructing the solution is complex if you are not a retirement plan expert. We wanted to make it easy for those to get access to the benefits of open architecture solutions, but with the ease of a bundled product.
What makes Ready Go! 401(k) unique from other retirement planning solutions on the market?
ReadyGo! aligns major open architecture experts into an easy to use turnkey solution. It addresses the issues often overlooked when constructing a plan. The features and benefits include top plan design, optimal investment options, favorable cost versus market, and investment fiduciary coverage. Advisors and plans can get access to top investment managers that they are familiar with, thus allowing the participant access to high end wealth management investments typically not available at the individual level.
Why did you choose Mid Atlantic over other broker-dealers?
Among others, Mid Atlantic specializes in retirement plans (advisory and custody). They get the space better than anyone else we considered. This understanding allows us to build an optimal and compliant retirement plan solution for each and every case we serve. Their access to top record keepers, top investment managers (very streamlined), and strong technology allows us to offer big plan solutions in the mid- to smaller plan market.
What questions should a financial advisor be asking before presenting Ready Go! 401(k)?
The ReadyGo! solution is designed to help all levels of advisors win new plans and improve current plans they are servicing. The main question is: “How does this make me, as the plan advisor, great in a world where I need stand out from the others?” ERISA and retirement plans are complex. We off-load that complexity from the plan advisor, create an amazing solution for their client (and for them), and provide the on-going support to ensure the plan solution remains best in breed. This protects the important client relationship for the advisor. Advisors appreciate that by using ReadyGo! they can quickly become more knowledgeable of the space. They also like that they aren’t ultimately responsible for this expertise.
What is the close ratio of those plans that propose Ready Go! as a solution?
We are closing approximately 75 percent of the proposals we send out.
What are your hobbies and interests?
ERISA. 🙂 Truthfully, I enjoy doing anything outdoors and active. I run marathons, do triathlons, love golf, hockey, etc. Anything that involves my two boys who are also highly active! They keep me on my toes.