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by Stephen Parezo

Karen Beech

October 3, 2005—During the 1990s many investors believed that they could do things all by themselves and largely ignored advice from financial professionals. Now the pendulum has swung back in the other direction so investors need their hands held more these days, according to Karen Beech, Fiducial’s compliance manager.

“Investors are looking at asset allocation as something that’s extremely important,” said Beech who works out of Fiducial’s Technical and Administrative Support Center (TASC) in Columbia, MD. “It isn’t necessarily the easiest thing to do so people want that hand holding. In this kind of market environment you just can’t wing it anymore.”

Beech, who joined Fiducial in June, says there any many unknowns in the current stock market climate especially considering the impact of the war in Iraq and the two recent hurricanes.

“The market is a big question mark,” she said.

Her core duties focus on general compliance matters for Fiducial’s registered representatives. She reviews and approves all correspondence between representatives and clients including advertising for industry publications and newspapers. This covers any kind of sales literature that would include letters to more than one client. She’s also involved in creating policies and procedures to keep the company in compliance which means that all the securities licensing is up to date.

Ever-changing market

Since the market is ever-changing, keeping close contact with the field is a must so Beech sends out a weekly compliance update each Friday that addresses hot button issues as well as helpful reminders for reps that may have forgotten some details along the way. One key area centers on client confidentiality which is a National Association of Securities Dealers (NASD) regulation and Securities & Exchange Commission (SEC) rule.

“Most of it is common sense as far as protecting client information is concerned,” Beech said. “Are all your filing cabinets locked? Are you aware of your surroundings?”

With nearly seven years experience in the field, Beech keeps a watchful eye on the latest guidelines issued by NASD and sends out notices to reps as part of a Firm Element Continuing Education. This requires securities firms provide continuing training consistent with their own needs and business for their registered reps and their immediate supervisors who have direct contact with clients in the conduct of securities sales, trading or investment banking.

Each firm must conduct an annual needs analysis and prepare a written training plan for the coming year. Although there is no mandated minimum annual coverage for each covered person, firms are expected to examine their training needs and provide training to covered persons and supervisors consistent with their business and individual needs. The needs analysis, training plan, training material, records of training delivery and individual participation are subject to regulatory review. Covered persons and supervisors are required to participate in training specified by their employer firms.

Hot button issue

As part of Fiducial’s Firm Element Continuing Education, Beech set up a course on annuities that representatives were able to complete online.

“It’s almost like a refresher course for them,” she said. “It goes into suitability requirements and making sure that you document things properly.”

Suitability is a hot button issue for the SEC especially where annuities are concerned. This is due to the fact that annuities offer a much higher commission than regular securities products so that tempts some representatives to put people in them that might not necessarily need them.

So what type of client should invest in annuities?

“You want to make sure, depending on the type of annuity, that the investor is someone who is maxing out their company retirement plan, has disposable income that can be invested for a number of years, are in a high tax bracket and basically needs another tax write-off,” Beech said.

Never a dull moment

Since the terrorist attacks of 9-11, anti-money laundering has been a major issue in the financial service sector with the Patriot Act passed to thwart anti-money laundering schemes that could be used to support terrorism.

“The government wants to make sure that we are monitoring clients and that we continue to monitor them,” she said. This involves checking where money wires are sent and who they are going to since certain reports have to be filed if clients try to deposit cash. If clients are depositing money simultaneously at several financial institutions in amounts of less than $10,000, Beech indicated that needs to be reported to the government.

“This is done to prevent money from falling into terrorist hands,” she said. “This used to be a big concern of banks but now they realize that brokers have check writing privileges.”

With all that’s going on in the financial services sector it’s clear that complacency is not part of the picture.

“It’s never dull,” said Beech. “There’s so much going on. It’s really exciting to be a part of that. You have to be on top of your game because things are literally changing every day.”

Stephen Parezo is the Media Manager for Fiducial.

Whatever your small business needs, your Fiducial tax and financial professional can analyze your situation and recommend an appropriate action plan. To locate a Fiducial office nearest you on fiducial.com, see the Zip Code Locator located in the upper right hand corner of the page. Do you have a particular topic that we should be writing about that can help your business? Please send your suggestions to: stephen.parezo@fiducial.com.

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