Issue Four October 2016


Welcome to the fourth edition of the Foreside Connections e-Newsletter!   Foreside Connections serves as a powerful tool for enhancing the ties between Foreside and its valued clients. The aim of this quarterly publication is to keep you informed of new initiatives, corporate updates, upcoming events and industry trends.  We hope you find this publication a valuable resource and welcome your suggestions and feedback.
Letter From The President
Thank you for your continued confidence in Foreside. On behalf of the entire company, I can tell you that we are motivated by the opportunities that you give us to help you succeed.  Delivering services that exceed your expectations is our top priority. In our prior edition of Foreside Connections, we discussed our pending acquisition of Beacon Hill Fund Services ("Beacon Hill").  We are pleased to announce that the acquisition closed on July 31 and brings together some of the industry's most experienced professionals and enhances our management team, scope of services, and opportunities for growth. 
 
We are also excited to announce the expansion of our global initiatives.  Effective August 2016, we have formally opened an office in New Delhi, India, out of which we are providing corporate advisory services and expanding our reach into the Southeast Asian markets.  In addition, our non-US client base to whom we provide multiple services, is growing exponentially and we are expanding our capabilities to enable them to access the U.S. market. For our U.S. clients looking to access the global markets we are continuously developing strategies and regulatory structures to facilitate their access and entry overseas.
 
Over the years, we have remained dedicated to developing our people, strengthening our capabilities, and enhancing our relationships with our clients and partners.  Foreside remains committed to our solutions which allow our clients to focus on their core business without sacrificing business management best practices. Thank you again for your continued support.
 
David Whitaker
President
Maximize Sales Efforts!
Forside, in partnership with Access Data, is pleased to offer a suite of products specifically designed to help investment managers develop and manage an effective sales and marketing process.


Opportunity Hunter combines Broadridge market data with 200 data points from Morningstar to calculate the sales opportunity for RIA's and IBD's.  This unique analytics tool shows how your funds compare against the fund currently sold by each advisor, and highlights where you can be the better option for their investment needs.  Opportunity Hunter provides the insights you need to zero in on your best prospects quickly and easily.  You can gain instant intelligence on best prospects: their location, what they sell, and where your funds outperform.  Below are key points that fuel Opportunity Hunter:
  • Morningstar Data (i.e Risk, Rankings, Performance, Expenses)
  • Data from form ADV regulatory filings including self-reported assets, client composition, and address (i.e. sources like Qualified Media/Meridian/Discovery collects)
  • $9 trillion of our Broadridge monthly assets segmented by Morningstar categories with $2 Trillion focusing in on the RIA Marketplace
  • Cognet Research to identify the best way to present marketing materials
Market Intelligence gives you unparalleled insight into your market position for all mutual funds and ETF's by distributor and office location, firms initiating trades through major clearing firms and custodians, and products across distribution channels by Morningstar category.  Market Intelligence couples the expansive database of industry market data across intermediaries together with advanced analytical and reporting tools to transform data into actionable information with increased visibility into account positions and your market share.  Market Intelligence expands visibility into the industry's new and fast-growing products and segments. The features outline the unparalleled insight Market Intelligence provides:
  • All Mutual Funds and ETF's by distributor and office location
  • Firms initiating trades through major clearing firms and custodians
  • Products across distribution channels by Morningstar categories
  • Insights to enable Sales, Marketing and Product Managers to pursue best opportunities with the confidence that they have the most comprehensive and up-to-date information available
  • Ability to view and track changes to asset positions and net asset flows
  • Your firm's market penetration by product category and benchmark market share down to the firm and office level
  • Your Fund company's product success against competing peer groups by Morningstar category
  • Intelligence to gain competitive market advantage in new market segments
  • Ability to create territory optimization plans that align sales resources to growth channels and regions
Sales Reporting/Data Management allows you to access information based on your individual business needs. Using the SalesVision Application, you can quickly create custom tabular reports for answers to questions like "Who are my top producers this month for a particular sales territory?  How many trades and redemptions have been made in a particular fund share class?"  Sales and Asset Reporting along with Data Management can be used to track transactions at a Firm, Office, and Person (FA) level.  Daily reports detail individual transactions by business lines, territories, sales channels and sales reps.  The below process and controls are what make Sales Report and Data Management unique to the marketplace:
  • Unique Dealer/Branch/Representative codes translated into Financial Advisors information
  • Daily Firm, Office,Person enrichment
  • Firm standardization and CRD's
  • Cleansing of Registered Reps, Teams, RIA, and Unknowns
  • Continuous cleansing of historical reps as new trades are presented
  • Periodic data matching across instances
  • Periodic audits/QC of MDR for data quality

For more information on Access Data and these products, please contact Emmy Bernard at (207) 210-6318 or at ebernard@foreside.com .
Foreside Speaks!
SEC Modernization and Beyond
On Monday, September 26th, Foreside participated in a private networking breakfast panel at the ICI Tax and Accounting Conference in Palm Desert, California sponsored by Confluence.  Monique Labbe, joined Vin Toner from Transamerica and Gary Casagrande from Confluence to discuss RegTech:  SEC Modernization and Beyond.  The discussion was centered on the impact of RegTech on the asset servicing industry and the impact of new reporting requirements.  The increased data requirements of forms NPORT and NCEN which require both machine and human readable reporting will allow the SEC to analyze and compare data across mutual funds in ways that were not previously possible.  The panel discussed with the audience the many implications of these new requirements including updates to technology, changes to operating models, and the shift from an accounting to an analytical and risk based review.  It was highly recommended that fund sponsors initiate conversations with their service providers, if they haven't already, to understand how they can assist with helping them to comply with the new rules and also understand the additional informational and oversight requirements they will need to provide.
Click HERE for full presentation.

Raising Capital in the US and Singapore
On September 29th, Jennifer Hoopes, Head of Global at Foreside Financial Group, spoke at a one day seminar at Bovill Ltd. about accessing the U.S. market and related regulatory matters for funds sponsored by European asset managers. Specifically, Ms. Hoopes addressed the regulatory requirements for a U.S. registered broker-dealer to market and sell funds in the U.S.,  What this means for non-US asset managers looking to market their products in the U.S., and what the various options are for addressing this requirement?

Topics covered included:
  • Relying on the "Issuer Exemption"
  • Being chaperoned by a U.S. broker-dealer
  • Hiring a third party marketing firm
  • Registering your sales people with a U.S. broker-dealer
  • Forming a proprietary broker-dealer
Click HERE for full presentation.

Foreside Gives Back!
Foreside was recently represented by 4 enthusiastic teams of bowlers who raised over $1,000 to support Big Brothers Big Sisters programs in Southern Maine. Competition was friendly, but fierce, and a good time was had by all.

Front Row - Left to Right: Gabriel Edelman, Dayna Kazilionis, Alicia Strout, Anna Clark, Rachel Pham, Ceara O'Neal
Back Row - Left to Right: Alex Bubier, Nick Pham, Thabo Kasongo, Daryn Levesque, Bill Cox, Chris Lanza.
Foreside's Services
Distribution
Fund Officers
Consulting

Changes Impacting Mutual Fund Distribution Efforts
While barriers to entry on distribution platforms are not new, requirements continue to become increasingly stringent.  These modifications range from increased thresholds on assets and track record minimums, to the additional vetting by outside due diligence firms.
 
In general, trends on super market platforms include a single point of contact for communication, more stringent demand requirements for on-boarding new funds and fund families, and increased fees.  Although these platforms embrace an open-architecture structure for their client base, continued fund family liquidations and fund mergers degrade the client experience, increase costs, and create operational complexities.  Some underlying causes of this are  a firm's lack of a formal distribution plan, increased use of index funds, other investment vehicles, such as ETFs, and a concentration of assets across large providers.  All of these prohibit firms from reaching viable scale and longevity.  In fact, according to the Investment Company Institute (ICI), the share of mutual fund assets managed by the largest five firms out of 873 fund sponsors continues to grow, reaching 45% in 2015 from 32% in 2000. 1
Recent announcements at the wire-houses are driven by broader industry catalysts, pending regulatory changes and heightened due diligence standards required across the industry.  These firms are taking steps towards their responsibility of continually reviewing funds on their platforms and making changes accordingly.
In addition, Fo reside is further dedicated to helping your firm navigate these changes by hosting calls with the on-boarding platforms through our connections call series.  Previous calls with Raymond James and LPL are posted on our website and our upcoming call will provide you insights into the Pershing Platform.
1 "2016 Investment Company Fact Book"; ICI Investment Company Institute, (2016 Edition), Page 17
Contributing author Sonja Formato, National Account Manager at Foreside.
Information Security Viligance!

Luring e-mails are specially crafted to pull at an individual's curiosity or willingness to help, with the ultimate goal of taking advantage of employees, companies and individuals alike. Thieves understand human nature and are relying on human behavior and habits to achieve their goal of gathering valuable information with the intent to profit from it.

The problem we have in this security equation is that there are billions of e-mails that traverse the web every day and protecting our employees and ourselves is unbelievably daunting. Remember, this is a game of chess and strategy, so one must move step-by-step, in a strategic yet pragmatic manner, to facilitate security. A combination of preventative (e.g., SPAM filter, antivirus and malware, IPS, backup tapes, training), detective (e.g., IDS, forensic tools, SIEM) and reactionary (e.g., incident response, BCP) measures are just a few processes and solutions to help mitigate threats derived from malicious and phishing e-mails.

In the end, a firm's focus must be on their employees and end users. Well informed and educated individuals are less likely to be phished or scammed into clicking on malicious links or opening harmful attachments, and are the key to enhancing our security posture. Be diligent by performing phishing awareness tests, explaining the intent and tactics used by thieves through their clever e-mails and, most importantly, developing security support to analyze potentially malicious e-mails identified by your end users.

Be cautious, be proactive and be vigilant!

Contributing author Jeffrey Lemmo, Information Security Manager at Foreside.

Foreside Connections Call!
Brexit: What U.S. Asset Managers Need to Know!
Richard Cross of Bovill
Richard Cross
Foreside proudly continues the quarterly "Connections" conference call series for 2016. Partnering with innovative industry experts, we aim to cover a broad spectrum of industry topics, to assist you with the growth of your business.  On Wednesday, September 14th, we hosted the 3rd Quarter Connections conference call with guest speakers Richard Cross and Ed O'Bree  of Bovill.

Ed O'Bree
Mr. Cross and Mr. O'Bree provided critical insights and observations into Brexit and how it affects U.S. Asset Managers looking to do business in the European Union.  Additionally, they addressed many specific questions around impacts to British firms looking to remain with the EU and how European citizens employed in the financial services industry in the UK may be adversely affected. 

Bovill is a financial services regulatory consulting firm with offices in London, Manchester and Singapore with clients across the U.S., Europe and Asia.  In business since 1999, Bovill provides expert support and assistance on U.K. regulatory and compliance matters.

Click HERE to listen to the replay!
Upcoming Events
NSCP National Conference  - October 2016
Representatives from Foreside will be attending the National Society of Compliance Professionals (NSCP) National Conference on October 17-19 in Washington DC. The NSCP conference offers unique educational opportunities to further the professional growth of compliance professionals. A special feature this year includes 6 sessions focused on the new DOL rule and its' application. For more information on the NSCP National Conference please click HERE.

Investor Economics Executive Forum - November 2016
As a sponsor to the second annual Investor Economics Executive Forum, Steve Mintos, Managing Director of Foreside's Corporate Advisory Services division will attend and present at this years venue on November 1st in Toronto.  Mr. Mintos will be on a panel discussing regulation, competition, technology disruption and shifting economics concerning the the U.S. funds industry.  For the full agenda to the Forum please click HERE. 

ICI Cybersecurity Forum - November 2016
On November 10, 2016 Foreside representatives will be attending the Investment Company Institute (ICI) third annual Cybersecurity Forum in Georgetown, MD. In addition to keynote speaker, Kevin Mitnick, participants will hear the latest cybersecurity threats and vulnerabilities, as well as effective defensive strategies from information security professionals.  For more information on the ICI Cybersecurity Forum please click HERE.

Quarterly Connections Call - December 2016
Join Foreside along with industry experts from Pershing, a BNY Mellon Company, as they provide and overview the firm, provide education on their platforms, and share best practices for effectively navigating the distribution landscape and industry trends.

CISO Executive Summit- December 2016
Foreside will attend the Evanta CISO Executive Summit on December 5, 2016 in Boston, MA.  The agenda will focus on common challenges and opportunities from the foremost information security executives of New England. For more information on the Evanta CISO Executive Summit please click HERE.

Inside ETF's- January 2017
Representatives from Foreside will attend the Inside ETF's Conference on January 22-25 in Hollywood, FL. The Inside ETF's Conference is the premier ETF event with over 120 speakers providing attendees with critical macro insights and actionable portfolio strategies from leading ETF institutions and ETF advisors. For more information on the Inside ETF's Conference please click HERE.

Industry News/Resources
For links to recent industry news, resources, and insightful commentary please click HERE .

Financial Fun Fact
Despite the New York Stock Exchange's notoriety, it was not the first stock exchange in the United States.  That distiniction belongs to the Philadelphia Stock Exchange, which was founded in 1790.

"Merchants' Exchange, Philadelphia" Dock and Walnut Streets; Artist J.C. Wilde; 1838, Historical Society of Philadelphia.

Quick Links
About Us
Distribution and Compliance Professionals dedicated to your success.
Foreside is committed to delivering innovative services that not only meet current requirements, but also anticipate emerging regulatory and marketplace developments. Clients rely on us to provide the information, operational support and strategic advice that are needed to thrive in today's complex arena of investments, compliance and risk management.  We collaborate with recognized service providers to ensure our clients receive informative and quality services.  Foreside is not affiliated with any of its partner service providers. For more information about Foreside, including service offering overview, staff bios, current industry news and upcoming industry conferences, visit our website at  www.Foreside.com .  



Sincerely,
 

Emmy Bernard
Managing Director, Head of Relationship Management
Foreside Financial Group, LLC