Operations and Your Adviser - Adviser Investments

Operations and Your Adviser

February 9, 2018

Episode Description
Interview With Dan Wiener and Judy Weeden

Operations are the backbone of successful wealth management firms. From executing trades to protecting client assets and data, a dedicated operations department provides a valuable, behind-the-scenes safeguard for client accounts.

Episode Transcript

Dan Wiener: Hello this is Dan Wiener, chairman and co-founder of Adviser Investments with another of our “Adviser You Can Talk To” podcasts. Today I’ve got as my guest Judy Weeden. She’s our operations manager here at Adviser Investments and a member of our portfolio review committee. Along with our director of operations, Judy runs a team that watches over all aspects of the daily ins-and-outs of cash, as well as trading, at the company. Judy, operations isn’t an investment topic and it certainly doesn’t come up much in conversations with our clients or the even the run-of-the-mill investor, but it strikes me that what you and your team do is critically important to everything that we do here. Can you give me a flavor of what makes the Operations department a critical cog in the wealth management wheel, if you want to call it that. And you know, start off with what you do. What is Operations?

Judy Weeden: Sure Dan, thanks for having me, by the way. So Operations, what we do is really support our advisers and other departments internally. We kind of like to think of ourselves as the backbone of the company, because we really are relied upon with facts and figures. One of our focus is really on data integrity. So we spend a lot of time reconciling accounts and ensuring that transactions are really accurate coming from custodians.

Dan Wiener: So when you talk about reconciling, is that something that happens every day, or something that happens once a month? What is that?

Judy Weeden: It sure does. So, we do it daily. Every morning, we’ll get a file from each of our various custodians. We’ll import it into our reporting accounting software and that’s really where we house all our information and we base off our trades from there as well as our quarterly statements and performance.

Dan Wiener: So what are you looking for? What comes in, in a reconciliation report?

Judy Weeden: Mostly transactions from the previous day, so like if a client decides to withdraw some cash, that transaction will come through. We’ll also get position files to ensure that, you know dollars and shares match what’s recorded at the custodian as well.

Dan Wiener: And all of this is getting checked on a daily basis?

Judy Weeden: Correct.

Dan Wiener: How many transactions or requests or checks do you think your team makes in a day or in a week or?

Judy Weeden: It’s really hard to say, I did go back and look at some stats. Most of the work that we do revolves around trading and as of right now we’re kind of going upwards of 400,000 trades and December is a really busy month for us so we’re on path to really surpass that number.

Dan Wiener: So 400,000 trades but it should be noted that that’s with how many different client accounts?

Judy Weeden: Over 4,000 clients.

Dan Wiener: Over 4,000 clients.

Judy Weeden: Right.

Dan Wiener: So you’re really, it’s imperative that the operations department keeps track of every one of those transactions and then double- and triple-checks it against what’s happening out in the marketplace as well.

Judy Weeden: Correct, yes.

Dan Wiener: I got it, okay. Very few wealth managers actually have dedicated operations teams, I guess because, you know operations doesn’t bring in the revenue, they just protect it. You all though, as far as I’m concerned pay for yourself many times over in the protection of our clients and our clients’ assets. How does operations particularly in this day of Internet fraud, you know website scamming, how do you all protect client money?

Judy Weeden: So first and foremost what we do, is we have a system of checks and balances in place. So every morning we are running audits and doing a trade blotter import. And we’re looking for unauthorized, potentially unauthorized trades done by people externally. So we have all user IDs associated with the traders internally. So we look for anything that seems suspicious and will reach out to the adviser and they will then speak to the client and will also speak to the custodian to see where that trade originated from. And when you’ve seen this, I mean obviously you wouldn’t be looking for it if you haven’t seen it from time to time.

Where does that come from? Is that somebody in the family making a trade that you didn’t know about or is it somebody in the company? Most of the times it’s someone with access to the custodian website. So they’ll have their own user ID and a login if they don’t want to bother the adviser with placing a trade, sometimes they’ll go in and sell something or buy something that is kind of something that we don’t prefer that they do. So we’ll just double-check–

Dan Wiener: I see.

Judy Weeden: –to make sure that that’s something that they wanted to happen.

Dan Wiener: So meaning that typically we’re making all the transactions in the account but the owner of the account may go in and make a transaction on their own or they’ve got a decision that they’ve made and they do it without telling us first.

Judy Weeden: Correct.

Dan Wiener: And this happens all the time I presume?

Judy Weeden: It doesn’t happen as frequently as you think but it does certainly happen and in those situations, we’ll have a conversation with the client or the adviser will. Just to ensure that that’s a trade that they wanted to place and we’ll have the opportunity to kind of cancel on their behalf if it’s something that both parties have decided it’s not something that they want.

Dan Wiener: What kind of cyber-protections do we have here and does the operations team really get involved in? Because that’s a huge issue now.

Judy Weeden: It really is, the operations team’s not super-involved with that. We do every time we reach out to our custodians or our clients we’ll use a client portal. Some of our reporting is done through client portal and we’re really having our clients request their quarter-end statements that way and I think that’s ideal versus having it sent through the mail.

Dan Wiener: I see, so we’re doing more electronic communication but it’s double and triple security, something like that?

Judy Weeden: And on the trader side too, we’ll have a two-factor authentication at times so when we log in they know it’s us.

Dan Wiener: And if someone wanted to, if someone was going out and looking at wealth managers, asset managers, what’s the thing that someone wants to, should want to know about an operations team? Or an operations department within a wealth-management company. What’s the question you want to ask about either the quality, quantity or otherwise?

Judy Weeden: I would want to know, you know what types of technologies that they have in place. What systems that they use, what their process and procedures are in the event that there is a data breach or an issue that comes across. Like how do they handle it?

Dan Wiener: And so, well you know this stuff. But if I’m an investor, what sort of technology am I asking about?

Judy Weeden: That’s a great question. I would say how are they handling the number of trades that you know, kind of comes across a person’s desk? How they are importing that, how are they ensuring that that’s done accurately every single time and consistently.

Dan Wiener: And what’s the answer?

Judy Weeden: I don’t know if I can say what systems we use but I feel like we’ve invested in great technology and systems here. We’ve kind of created you know checklists and procedures where we’re double-checking our work, we’re ensure, we’re double-triple checking and ensuring that what we’re doing makes sense on a monthly basis or even daily we’re looking at allocations to make sure that, you know the trades we’ve done the prior day is where it should be.

Dan Wiener: And does this involve more than one person? So one person that’s checking on another person’s work, is that one way to ensure security?

Judy Weeden: That is one way, yes. And that’s what we do, correct.

Dan Wiener: Uh-huh, uh-huh. And as an expert in operations, what do you think the one thing is, or the two things are that, that you worry about more than anything else? Because in the end as you said, operations is really the backbone of the way we operate here. So what do you worry about, in terms of your operations on a day-to-day basis?

Judy Weeden: What I worry about is ensuring that our team has the proper resources to really function. Just making mistakes that are preventable. Trying to really, stay in line with our processes that we have in place. That’s one of the main things. I know a lot of firms, or there are some firms out there that don’t have the proper resources. They wear multiple hats, so they don’t have the time or the resources really dedicated to resolving issues. They’re busy putting out fires rather than preventing them.

Dan Wiener: So it’s both resources but also the processes right?

Judy Weeden: Right, yes.

Dan Wiener: You need to have the check lists, you need to have an order in which do things, in which you check things so that it’s all secure. And in the end who benefits?

Judy Weeden: The client.

Dan Wiener: Absolutely. Alright thank you, this is Dan Wiener and I want to thank you for listening to another one of our “Adviser You Can Talk To” podcasts. I’ve been speaking with Judy Weeden.

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There are some firms out there that don’t have the proper resources. Employees wear multiple hats, so the company doesn’t have the time or the resources really dedicated to resolving issues. They’re busy putting out fires rather than preventing them.


Judy Weeden

Operations Manager

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