Prospecting for business and landing a new account is one of themost exhausting and rewarding aspects of being a broker.

But what happens after the sale can make all the difference asto whether you retain that client. Transactions in this industryare highly regulated and processing the extensive paperwork can betime consuming for both broker and client. As an independentfinancial services broker/dealer, we service 300 registered repsacross the country. Our processes are lengthy and often-requiredseveral manual steps—from uploading applications to ensuringcompliance review—that can tie up resources internally as paperworkwinds its way through various departments.

In an era where brokers are under increasing pressure to addvalue to client relationships, it’s become a business imperative tostreamline administrative tasks and focus on service.

This was the driving force behind the implementation of adocument management solution to automate many of our previouspaper-based processes. As a result, we have significantly decreasedthe time to set up new accounts with an automated workflow whileensuring regulatory compliance. More important, our staff has beenfreed from dealing with logistics so that they could focus onclient needs.

Doing the math

Our back office processes up to 100 new account applications aday via the trade desk, which opens brokerage accounts. Eachapplication has a minimum of six pages and, if it’s a corporate ortrust account application, it may have 50 pages. Applications arethen reviewed by the compliance department, which makes surebrokers operate in accord with the rules and regulations of FINRAand the SEC. Prior to implementing our workflow system, ourfinancial advisors would fill out the applications and send them tothe corporate office via overnight mail. We would receive theapplication the next day, review it and make sure it was complete.Our NIGO (not in good order) rate was about 30 percent. That meansthat about one in three—almost a third—of all applications hadmissing information.

Streamlined workflow

Using the workflow functionality of Westbrook’s Fortis documentmanagement software, representatives are able to submitapplications electronically. If the form is incomplete therepresentative is prompted to fill in missing information. Then thesigned document is scanned, uploaded online, and routed to ourcorporate office. The compliance team reviews it, and approvedapplications go to the account processing team for review and tomake sure it’s cross-filed in the account entry system. This savestime, as well as reduces errors and mailing costs.

What used to take 45 minutes from beginning to end, now takesconsiderably less time. We were able to eliminate one position fromthe account processing department and reallocate that person. Thereare five people in that department now, and we process the sameamount of business that our competitors do with eight or nineemployees. We are able to grow our business without addingadministrative staff.

Before the implementation of electronic workflow, it took abouttwo days from when a client actually signed an application toapproval in our home office. The automated process enables same dayapproval. Our representatives can set up accounts quicker, and theysave the cost of sending paper applications via overnight mail.

Increased cross-functionality

Once the application process was automated, we began using theworkflow for other types of approvals. For example, our compliancedepartment provides evidence of required principal review andapproval through an electronic signature pad. This saves us timeand money because we don’t have to print out documents to signthem.

There’s also a data field that has a security setting that onlyallows certain users to change it. They can choose a compliancestatus from a drop down menu and indicate whether the applicationis approved, NIGO, or rejected. The solution records the name ofthe user who acted on the document, along with a date and timestamp.

Aggregate ROI to Date

To date, close to 10,000 documents have been digitized since ourworkflow solution went live in 2009. We’ve doubled our volume ofpaperwork since 2009 and between 50 percent to 60 percent of ourdocuments now come through as electronic images.

Other documents, including broker-licensing paperwork, are alsoarchived in the system. We can take advantage of different documenttypes, index fields, and security features across departments. Thissolution has increased the speed at which we can look upinformation—whether it’s needed to answer a question from one ofour registered representatives or a regulatory request from ourcompliance department.

Looking ahead, we plan to automate the processes involved insetting up mutual fund and insurance applications using this samesolution. We are in a heavily regulated industry and there aremultiple steps to effectively open an account and processtransactions. Regulation will only increase and it’s critical tohave a workflow process that allows us to aggregate, scan, andarchive information—whether it’s to complement a third-party systemor for internal back up and archive purposes. Having paperwork gothrough so many hands, as mandated by compliance requirements,makes it more probable that something may get misplaced in theshuffle. A fully automated document management solution eliminatesthis probability. In fact, our solution was put to the test duringa recent audit. It was extremely handy to be able to easily andquickly pull up electronic versions of requested documents.

Best practices

It’s definitely a paradigm shift for any broker to transitionfrom a paper-based system to imaging. If you’ve never used animaging system, it will be difficult to understand or set upwithout having an expert provide assistance with indexing andimplementation. There are countless ways to index your clientfiles, for example, but the biggest mistake is actually trying toorganize them like your filing cabinet. The vendor is the expertsource on the functionality and capabilities of the solution.

However, don’t hesitate to also pick up the phone and ask yourcolleagues or professional network for specific suggestions.

Here are a handful of other lessons we learned along the way toautomation:

Identify the issues that are driving up administrative costs.The most difficult aspect is not in determining how to automate amanual process; it’s getting everyone to agree what the process isand should be. Understand where your business information flows inand out of your systems and identify consolidation points. Ourvendor estimated that about 30 percent of total project time wouldbe spent defining current business processes and gaining consensuson the proposed new process.

Implementing a document management solution involves ongoinganalysis, planning, and measurement. Decide in advance whatactivities you plan to track, set benchmarks, and measureprogress.

Plan to carefully track user and administrator activities toassure compliance with Sarbanes-Oxley, FINRA, SEC and otherindustry-specific regulations. Audited user activities shouldinclude indexing, modifying, deleting, viewing, faxing, forwarding,e-mailing, and printing data and documents. Your documentmanagement solution should track versions, audit system changes,and protect intellectual property from unauthorized access.

Address retention schedules for different types of documents.Your company’s audit and legal departments should help create aframework and a set of policy guidelines.

Ensure that remote workers and satellite office have the sameaccess to applications and internal resources as local employees.Look for applications that provide secure and easy access forremote workers across a range of environments—satellite offices,home offices, and client sites.

Since regulatory changes in the financial services and benefitsenvironment occur rapidly, find a document management solution thateasily accommodates change. Invest in technology that is wellpositioned to take advantage of new platforms and services. Lookfor solutions based on Web services that are designed to supportricher, more interactive applications. While cloud computing ispoised to become more prevalent, there are still unansweredquestions about the safety of data housed in the cloud, as well aslegal issues and concerns that data could be held captive.

It takes teamwork

When it comes to implementing a document management and workflowsolution, involve your entire staff in all stages of theprocess—from mapping out the individual steps to troubleshooting.It’s critical everyone understand the scope of the technology aswell as the individual components so they have an in-depthperspective on the logic behind the system-at-large.

Most important, however, you need to overcome the sentiment of“technology can’t possibly do that.” On the contrary, it probablycan if you have the right solution in place and just ask.

Deliver on service

Driving efficiency and increasing cost savings is the ongoingmantra for businesses in just about any industry looking to competeand thrive in an increasingly competitive landscape. Documentmanagement automation is another tool that today’s firms andbrokers can deploy to achieve both objectives.

While implementing any new technology can cause some level ofanxiety, keep in mind that today’s solutions are both flexible andscalable to meet your needs—regardless of the complexity of yourfirm and its processes—and having the right vendor can make all thedifference in having the right solution implemented smoothly andefficiently. In our case, implementing a document managementsolution not only helped us realize these key objectives, but alsoimproved our responsiveness to client needs. And when it comes downto it, delivering exceptional customer service is always thepriority.

Michael Bewley is COO of Kovack Securities Inc., in FortLauderdale, Fla., a privately owned independent broker/dealer. Youcan reach Bewley at [email protected].