Consultants BearingPoint have “announced” that they will “begin offering technology related operational and regulatory response services to the retail investments sector, in response to market demand for products that address the increasing compliance burden companies are facing.”
The services, called Operational & Regulatory Response Services (ORR), aill aim to address the technology aspects of regulatory-driven issues such as mutual fund breakpoint and market timing, control breaks like fraud, and operational challenges such as conversion problems.
“This industry has faced significant regulatory scrutiny over the past few years, with a number of issues coming to light requiring changes in behavior and requiring customers to be made whole due to past problems,” says Christopher Formant, BearingPoint’s Executive Vice President, and Global Financial Services. “The timing of these services offerings demonstrates how BearingPoint can work with brokerage firms, mutual fund companies and the regulatory oversight community to develop tailored solutions to address current industry issues.”
Christopher Kundro and Stuart Feffer, managing directors with BearingPoint and co-leaders of the firm’s Brokerage & Securities Servicing and Wealth & Investment Management groups, will work with BearingPoint’s “solution” areas to offer the services to brokerage and mutual fund firms. Feffer and Kundro will also continue to offer specialized management and technology consulting services focused on such key segments as brokerage, investment management and securities servicing.
“Efforts to comply with these new rules can be all consuming, with immovable deadlines imposed from the outside,” says Feffer. “Institutions are seeking such services to help manage their response, get the problems addressed quickly, and make sure they do not recur, all while keeping the current business running.”
Feffer noted that issues related to conversions, or when firms merge or change processing platforms, can significantly impact customers and can be every bit as distracting as the industry-wide regulatory issues, especially when problems are not uncovered before going live.
“BearingPoint will work with brokerage and mutual fund firms on operational infrastructure issues to help them focus on better controls and technology,” says Kundro. “When problems are discovered we will help identify the root causes, ‘stop the bleeding’ short-term, develop processes to address the institution’s customers’ losses as soon as possible and implement longer-term solutions to prevent a recurrence. These kinds of problems require an interdisciplinary approach, including project management skills, business understanding, operational experience, technology capability and an ability to coordinate our work with the firm’s compliance and legal areas.”
BearingPoint says it has worked with several different financial services organizations over the past year to assist in their responses to Class A and Class B mutual fund breakpoint problems, deal with issues arising from large-scale systems conversions and improve operational controls. These service offerings are expected to be in demand by current and prospective clients as they deal with inquiries related to the appropriateness of Class B (back-end load) mutual fund shares and variable annuities sold to investors, and by firms facing emerging operational issues related to systems conversions.
BearingPoint’s Wealth & Investment Management group works with retail brokers, investment managers, mutual fund companies, private wealth managers, hedge funds, correspondent clearing firms, prime brokers, custodians, and administrators.