Blog > 5 Compliance Process Improvements to Help Your RIA Scale

5 Compliance Process Improvements to Help Your RIA Scale

What holds most advisory firms back from faster growth and continued success? The answer might surprise you.

It’s not certain sales techniques or the need for more marketing. Instead, it’s often the processes that are (or are not) being followed.

Advisors can’t afford to have loose or undefined processes in place, as established workflows help keep firms compliant and above board. This is especially true when it comes to ensuring your firm is operating in a compliant manner. Compliance is one part of your firm where following well-established processes is a must.

But it’s easier said than done for large advisory firms to halt everything, develop new processes, and then successfully implement them across the company. The good news is, there’s a much, much easier way to immediately improve compliance processes for RIAs using Nitrogen’s Compliance features.

In this blog, we’re showing you how the Nitrogen Growth Platform works to increase your team’s efficiency and help you build a process-oriented firm that keeps compliance top-of-mind.

5 Compliance Processes for RIAs that Nitrogen Improves

The Compliance features within Nitrogen are designed to empower home offices with the tools needed to review thousands of client accounts at a glance and take action quickly.

It’s meant to serve a wide range of teams and leaders including:

  • Advisory firm owners
  • Operation teams
  • Compliance and supervision teams
  • Heads of wealth management
  • C-suite executives including CEO, CCO and COO

How does it help these financial professionals? Often, advisors are so focused on growing their business that they forget to put a system in place to protect what they’ve built. But in order to continue scaling the firm and growing AUM, they need to have a firm that runs like a well-oiled machine.

The Nitrogen growth platform helps achieve this level of firm-wide visibility and cohesion in several ways:

  1. Identifying misaligned investment objectives
  2. Reporting and analyzing client segments
  3. Discovering Risk Number® drift
  4. Providing fiduciary documentation for SEC audits
  5. Conducting firmwide allocation review

Here’s how each of these features helps advisory firms improve their compliance processes.

#1: Identifying Misaligned Investment Objectives

The best defense is a good offense, and it’s in your firm’s best interest to identify and resolve potential compliance concerns before they even arise.

Nitrogen starts the growth flywheel spinning by helping you deliver a consistent client experience. Satisfied clients are one of your greatest tools for growth. Having the tools to standardize the process and deliver an exceptional experience every time is an effective way to retain and scale.

Nitrogen Compliance drives alignment between your book of clients, your documented objectives and the investment solutions you’re delivering to investors.

#2: Reporting and analyzing client segments

Your firm could have 1,000 clients or 10,000 clients—regardless of size, the Nitrogen platform flies through all your accounts to quickly identify potential issues before they become problems.

With a dynamic view into your entire book of business, you can save hours and hours of spot-checking. Better yet, Nitrogen Compliance helps ensure no account goes unchecked or unreviewed due to manual oversight.

In minutes, you have the ability to identify accounts that may have inappropriate investments, are over-concentrated in certain sectors or are simply not suitable for the client’s target or goals. By zoning in on these types of concerns, you can direct your attention to the accounts that need it most at the moment.

#3: Discovering Risk Number Drift

A client’s tolerance for risk changes throughout their lifetime. But without the right tools in place, determining each client’s individual risk tolerance on a regular basis is an incredibly manual and time-consuming process. But neglecting to track it can lead client portfolios into a danger zone, with allocations that are no longer appropriate for their current tolerance.

Nitrogen’s brand-new data architecture collects fresh data daily from each account in your firm’s book of business. Every night, risk is recalculated on every single holding in each client account using Nitrogen’s Risk Number methodology.

Advisors can upload a client’s investment objectives into their account, and define the acceptable range of risk.

With the parameters already in place, you’ll have the ability to identify and isolate accounts with risks that are currently sitting higher or lower than a client’s unique target range. With the right processes in place, you have the ability to take swift action and ensure every client’s portfolio is appropriately allocated to meet their unique goals.

Whenever you need a high-level view, Nitrogen’s Compliance allows you to sort the data by Risk Number, advisor name, account balance, and household.

#4: Providing fiduciary documentation for SEC audits

The immense advantage of implementing a growth platform like Nitrogen is that registered investment advisors and compliance can get — and remain — on the same page at all times.

If your firm has experienced an SEC audit in the past, you’ll likely understand why alignment across the firm is so incredibly important. The collaboration tools included in Nitrogen help to easily and effortlessly keep the compliance team in the loop at all times.

In the event an audit occurs, your firm will have the ability to run reports and export data directly from Nitrogen. Rather than spend months and countless hours digging into data that is wrongly filed, disorganized or potentially out of compliance, you can access all the data needed with one click.

Because Nitrogen keeps your advisors and compliance teams constantly connected, your firm can drastically reduce the stress and anxiety often associated with preparing for an audit.

#5: Conducting firmwide allocation review

Nitrogen’s robust financial services compliance software offer registered investment advisors quick insights into client accounts, allowing them to search for any portfolios that may have concentrated positions. For example, advisors can filter through all accounts at once to instantly identify any accounts with over 10% concentration in an individual stock. This search function can also be used to identify if any clients may have a high concentration of cash.

Say we have another meme stock craze. Team members could easily use this search function to determine if any advisors put their clients into a risky investment (such as Gamestop in 2020).

Jumpstart Your RIA’s Compliance Processes with the Nitrogen Growth Platform

One of the greatest advantages of Nitrogen is that it’s designed to fit in seamlessly with your existing systems and workflows. Rather than having to endure the headache of replacing existing software, Nitrogen gives you, your compliance team, and your operation team better visibility into your business.

Your firm’s potential to grow relies on its ability to solidify systems and improve compliance processes from the inside out.

Schedule a free demo today to discover how Nitrogen can help you achieve your growth goals in 2023.

In other news, we’ll be unlisting our mobile app from Apple’s App Store and Google Play while we dream up the next generation of advisor mobile innovation. Questions? The industry’s best Customer Care team would love to help at [email protected].

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