Friday, December 6th, 2019 and is filed under AI Insight News
Be proactive about internet security risks and unauthorized data access that can impact clients and your business.
The financial services industry is certainly aware of potential security vulnerabilities and risks. While protections are in place, cybersecurity isn’t keeping pace with the technology advances in the financial services industry according to “The State of Software Security in the Financial Services Industry”. The survey conducted as part of the report also shows that 65% of respondents are concerned with complying with cybersecurity requirements.
Source: The State of Software Security in the Financial Services Industry
How does your firm compare?
The research report was commissioned by the Synopsys Cybersecurity Research Center (CyRC) and conducted by the Ponemon Institute. It includes a survey of over 400 IT security practitioners in various sectors of the financial services industry, including banking, insurance, mortgage lending/processing, and brokerage.
Read the detailed survey results here to see how your firm compares, including:
- The software security posture of financial services companies
- Risks to financial software and applications
- Security practices in the design and development of financial service software and technologies
How regulators look at cybersecurity and key strategies to be compliant
Not only is data security a concern, but regulators have also taken interest in cybersecurity risks that may impact financial firms. Below are five things every regulator looks for during an audit:
- Risk Register
- Framework and Assessment of the Security Program
- Strategy and Roadmap
- Incident Response Plan
- Governance & Centralized Management
7 security tips for financial firms
Take a look at 7 security tips for financial firms to learn about steps you can take such as training, establishing policies and securing devices to help lessen your security risks. The first tip recommends employee training, which the Ponemon Institute study mentions is often not mandated within organizations.
AI Insight collaborated with Docupace Technologies, LLC and Beacon Strategies, LLC to develop a CE Course, “Cybersecurity Awareness for Financial Professionals” to help you better understand the regulatory focus on cybersecurity, the threat landscape and practical things you can do to protect client data. This course is eligible for 1 credit toward the CFP® and other designations. Learn more
Wednesday, November 20th, 2019 and is filed under AI Insight News
Considerations when working with non-traditional ETFs
North American Securities Administrators Association (NASAA) recently released a report recommending that broker dealers review policies and procedures for non-traditional exchange traded funds (ETFs).
“The NASAA report recommends tailored supervisory procedures be established for firms that allow leveraged and/or inverse ETF transactions. Further, that the supervisory procedures address the heightened and specific risks associated with these complex products.”
Click here to download the full report.
Be proactive to fully understand non-traditional ETFs
Leveraged ETFs are investment vehicles for sophisticated investors who are looking to gain short-term magnified exposure to the markets. However, it’s important to clearly understand that their unique characteristics come with inherent risk. Take AI Insight’s CE course, Introduction to Leveraged and Inverse ETFs, to help you understand the composition of leveraged ETFs, mechanics of how they operate, and risks associated with them. This course is eligible for 1 CE credit toward the CFP® and other designations.
Monday, October 14th, 2019 and is filed under AI Insight News
We recently released our September Private Placement Insights. Highlights from the report include:
- September private placement fund formation was the slowest of the year, coming off of a strong August.
- Given the slower pace in September, our private placement coverage is essentially flat year-over-year, with all categories down in terms of new fund coverage and target raise except 1031 exchanges and Opportunity Zone funds.
- As of September 30th, AI Insight covers 155 private placements that are currently raising capital, with an aggregate target raise of $15.9 billion and an aggregate reported raise of $7.7 billion or 51.5% of target. This includes the 120 private placements added to our coverage in 2019.
- As of September 30th, 87 private placements have closed year-to-date which raised approximately 92% of their target raise, compared to 160 private placements that closed in FY 2018 which raised approximately 63% of their target.
Log in or subscribe to AI Insight to further research, sort, compare, and analyze all of the private and public funds in our coverage universe. See who’s new in the industry and what trends are impacting the alts space.
AI Insight’s Industry Reporting capabilities help you review alternative investment trends and historical market data for Private Placements, Non-Traded REITs, BDCs, Closed-End Funds, and Alternative Mutual Funds. Receive up to 24 extensive reports per year to help broaden your alternative investment reviews. Click here to request a sample report.
Watch this tour or request a live demo of AI Insight’s expansive Industry Reports customized to your business needs.
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Chart and data as of Sept. 30, 2019, based on programs activated on the AI Insight platform as of this date.
Activated means the program and education module are live on the AI Insight platform. Subscribers can view and download data for the program and access the respective education module.
On a subscription basis, AI Insight provides informational resources and training to financial professionals regarding alternative investment products and offerings. AI Insight is not affiliated with any issuer of such investments or associated in any manner with any offer or sale of such investments. The information above does not constitute an offer to sell any securities or represent an express or implied opinion on or endorsement of any specific alternative investment opportunity, offering or issuer. This report may not be shared, reproduced, duplicated, copied, sold, traded, resold or exploited for any purpose. Copyright © 2019 AI Insight. All Rights Reserved.
Wednesday, September 18th, 2019 and is filed under AI Insight News
We recently released our August Private Placement Insights. Highlights from the report include:
- As of August 31st, AI Insight covers 164 private placements that are currently raising capital, with an aggregate target raise of $11.5 billion and an aggregate reported raise of $7.3 billion. This includes the 114 private placement funds added to our coverage in 2019.
- 1031 exchanges continue to expand. This is understandable given the long-term run in commercial real estate prices, as investors look to capture gains and defer taxes.
- There were 10 new 1031s added to our coverage in August, with an aggregate target raise of $339.4 million. This is higher than the prior month, and the category remains ahead YoY in terms of new fund formations and aggregate target raise.
Log in or subscribe to AI Insight to further research, sort, compare, and analyze all of the private and public funds in our coverage universe. See who’s new in the industry and what trends are impacting the alts space.
AI Insight’s Industry Reporting capabilities help you review alternative investment trends and historical market data for Private Placements, Non-Traded REITs, BDCs, Closed-End Funds, and Alternative Mutual Funds. Receive up to 24 extensive reports per year to help broaden your alternative investment reviews. Click here to request a sample report.
Watch this tour or request a live demo of AI Insight’s expansive Industry Reports customized to your business needs.
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Chart and data as of August 31, 2019, based on programs activated on the AI Insight platform as of this date.
Activated means the program and education module are live on the AI Insight platform. Subscribers can view and download data for the program and access the respective education module.
On a subscription basis, AI Insight provides informational resources and training to financial professionals regarding alternative investment products and offerings. AI Insight is not affiliated with any issuer of such investments or associated in any manner with any offer or sale of such investments. The information above does not constitute an offer to sell any securities or represent an express or implied opinion on or endorsement of any specific alternative investment opportunity, offering or issuer. This report may not be shared, reproduced, duplicated, copied, sold, traded, resold or exploited for any purpose. Copyright © 2019 AI Insight. All Rights Reserved.
Thursday, August 15th, 2019 and is filed under AI Insight News
We recently released our July Private Placement Insights. Highlights from the report include:
- AI Insight added 14 new private placements added to our coverage in July.
- This included one new Conservation Easement, the first one added this year.
- This niche strategy is down for the year, along with energy and preferred offerings strategies.
- Conservation Easements have been in somewhat of a hold period due to heightened IRS scrutiny of the appraisal methods used to calculate deductions, as well as the uncertainty over the allegations against one of the industry’s largest sponsors.
- ON DECK: As of August 8th, there is one more conservation easement program coming soon, offered by the same sponsor as the first.
Log in or subscribe to AI Insight to further research, sort, compare, and analyze all of the private and public funds in our coverage universe. See who’s new in the industry and what trends are impacting the alts space.
AI Insight’s Industry Reporting capabilities help you review alternative investment trends and historical market data for Private Placements, Non-Traded REITs, BDCs, Closed-End Funds, and Alternative Mutual Funds. Receive up to 24 extensive reports per year to help broaden your alternative investment reviews. Click here to request a sample report.
Watch this tour or request a live demo of AI Insight’s expansive Industry Reports customized to your business needs.
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Chart and data as of July 31, 2019, based on programs activated on the AI Insight platform as of this date.
Activated means the program and education module are live on the AI Insight platform. Subscribers can view and download data for the program and access the respective education module.
On a subscription basis, AI Insight provides informational resources and training to financial professionals regarding alternative investment products and offerings. AI Insight is not affiliated with any issuer of such investments or associated in any manner with any offer or sale of such investments. The information above does not constitute an offer to sell any securities or represent an express or implied opinion on or endorsement of any specific alternative investment opportunity, offering or issuer. This report may not be shared, reproduced, duplicated, copied, sold, traded, resold or exploited for any purpose. Copyright © 2019 AI Insight. All Rights Reserved.
Tuesday, July 16th, 2019 and is filed under AI Insight News
We recently released our June Private Placement Insights. AI Insight currently covers 154 private funds that are raising capital, representing over $5 billion in capital raise/AUM. This includes 14 new private placements added to our coverage in June. Highlights from the report include:
- 2019 fund formation overall is on par with 2018. Target raise is lower = smaller average fund size.
- Real estate funds continue to dominate the private placement space.
- 43 new 1031 exchanges and 21 new non-1031 real estate funds have been added to our coverage in 2019.
- 8 qualified opportunity zone funds have been added in 2019 with more coming soon. However, raise is slow, with the funds reporting an aggregate raise of 11.9% of target.
- Other niche strategies (energy, conservation easements, preferred offerings) are down for the year.
Log in or subscribe to AI Insight to further research, sort, compare, and analyze all of the private and public funds in our coverage universe. See who’s new in the industry and what trends are impacting the alts space.
AI Insight’s Industry Reporting capabilities help you review alternative investment trends and historical market data for Private Placements, Non-Traded REITs, BDCs, Closed-End Funds, and Alternative Mutual Funds. Receive up to 24 extensive reports per year to help broaden your alternative investment reviews.
Watch this tour or request a live demo of AI Insight’s expansive Industry Reports customized to your business needs.
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Chart and data as of June 30, 2019, based on programs activated on the AI Insight platform as of this date.
Activated means the program and education module are live on the AI Insight platform. Subscribers can view and download data for the program and access the respective education module.
On a subscription basis, AI Insight provides informational resources and training to financial professionals regarding alternative investment products and offerings. AI Insight is not affiliated with any issuer of such investments or associated in any manner with any offer or sale of such investments. The information above does not constitute an offer to sell any securities or represent an express or implied opinion on or endorsement of any specific alternative investment opportunity, offering or issuer. This report may not be shared, reproduced, duplicated, copied, sold, traded, resold or exploited for any purpose. Copyright © 2019 AI Insight. All Rights Reserved.
Friday, June 14th, 2019 and is filed under AI Insight News
AI Insight is a platinum sponsor of Real Assets Adviser. Read the articles contributed by our staff in this month’s issue:
- “2018 by the numbers: A performance review of non-traded REITs in the year past“, by Laura Sexton, who serves on the magazine’s Editorial Advisory Board.
- “Alt funds: Tepid numbers but low volatility“, by Lou Johnson, CFA, covers alternative mutual fund performance and reporting.
Real Assets Adviser is a monthly publication dedicated to providing actionable information on the real assets class to the broader private wealth community.
- Log in to your Real Assets Adviser account to view the June issue.
- Not a subscriber? Sign up for your free 1-, 2- or 3-year subscription to Real Assets Adviser.
Tuesday, May 28th, 2019 and is filed under AI Insight News
Improve your research process using AI Insight’s Alternative Mutual Fund Research capabilities. Our alternatives-centric strategy provides comprehensive information covering investment methods to help you apply liquid alternatives in your practice. Watch a short tour
- Conduct Research: Use reports to research quantitative and qualitative data including fund
company, strategy and investment advisor overviews.
- Understand Fund Strategies: Research strategies including managed futures, long-short, market
neutral and alternative allocation.
- Track Performance: Stay current with performance using portfolio-oriented peer groups and
strategy-based benchmarks for comparison insight.
- Grow Your Business: Use tools to expand your knowledge and track your due diligence efforts
to more confidently identify and apply alternative investment solutions.
Friday, February 1st, 2019 and is filed under AI Insight News
FINRA recently issued its 2019 Risk Monitoring and Examination Priorities Letter along with its 2018 Examinations Finding Report. These reports highlight, among other things, the continued focus on client suitability and overconcentration in non-traded investments, and the need for reasonable due diligence for private placements that is well documented.
Specifically, the 2019 Priorities Letter states,
“As always, suitability will remain one of FINRA’s top priorities. This year, some of the specific areas on which we may focus include: (1) deficient quantitative suitability determinations or related supervisory controls; (2) overconcentration in illiquid securities, such as variable annuities, non-traded alternative investments and securities sold through private placements; and (3) recommendations to purchase share classes that are not in line with the customer’s investment time horizon or hold for a period that is inconsistent with the security’s performance characteristics…”
The 2018 Findings Report stated,
“FINRA has observed instances where some firms that have suitability obligations under FINRA Rule 2111 (Suitability) failed to conduct reasonable diligence on private placements and failed to meet their supervisory requirements under FINRA Rule 3110 (Supervision). FINRA Regulatory Notice 10-22 describes the circumstances under which firms have an obligation to conduct a “reasonable investigation” by evaluating “the issuer and its management; the business prospects of the issuer; the assets held by or to be acquired by the issuer; the claims being made; and the intended use of proceeds of the offering.”
Additionally, in the 2018 Findings Report, FINRA outlines the characteristics of firms that have performed reasonable due diligence, and reminds firms conducting due diligence of their obligation to document both the “process and results” of such reasonable due diligence analysis.
Key Takeaways
- Carefully review and understand the specific suitability requirements for each non-traded or private placement program utilized, and ensure that your firm has a documented process in place to monitor the compliance with suitability requirements.
- Perform a “reasonable investigation” of all complex products, focusing on the specific factors outlined by FINRA in the 2018 Findings Report. For further guidance on what constitutes a “reasonable investigation,” review FINRA Regulatory Notice 10-22.
- Document the due diligence process – remember, if it isn’t documented, it was never done.
- If utilizing third party due diligence vendors, ensure that your firm independently investigates any red flags identified, and document your firm’s investigation and findings.
Let AI Insight help you stay Compliant
- Unbiased education: Access product-specific training on the features, risks and suitability for hundreds of offerings.
- Conduct research: Create efficiencies in your due diligence review process using our robust database to source new products as well as analyze and compare hundreds of alternative investment programs, including non-traded programs, private placements, and alternative mutual funds.
- Compliance documentation: Demonstrate what you’re doing to support your firm’s regulatory requirements in a transparent way. AI Insight captures all of the activity your firm members complete within the platform including training modules, offering document reviews and research conducted.
Resources
Tuesday, December 19th, 2017 and is filed under AI Insight News
As 2017 comes to a close, AI Insight CEO Sherri Cooke reflects on the past year and looks forward to what’s coming up in 2018.
Q: What are some of the key reflections you have about 2017 and some points of interest for the coming year?
SC: This year we increased the number of RIAs using the AI Insight platform, so I’m glad that we’re able to support RIAs as this channel continues to grow. We look forward to continuing to expand these relationships in 2018. We also made significant upgrades to our AI Insight Education Module functionality, and we’ve received a lot of positive feedback on the updates. We’re always working to make the platform easy to use and add more valuable capabilities.
One of the most exciting highlights as we close out 2017 is the fact that we will be launching a new feature with expanded alternative mutual fund research capabilities in the new year. Advisors will be able to compare the details and financial performance of alternative investment mutual funds with reporting and documentation features our subscribers have come to rely on for more traditional Alternative Investment research. We’ve just hired Lucas Johnson who was a due diligence analyst with National Planning Holdings, Inc., where he specialized in due diligence reviews of liquid alternatives and other alternative investments. He’ll be stepping in to help launch our liquid alternative research program. You’ll see much more about this in the first quarter.
From an industry perspective, there’s been a bit of a relief relative to the DOL Fiduciary Rule implementation date, yet it doesn’t change the focus on compliance and regulatory scrutiny. The continued market run is remarkable, to say the least, inspiring growth and confidence. But that kind of house-of-straws confidence can increase concern about the negative consequences of a potential market correction. Smooth or bumpy, it’s our commitment to help advisors and clients manage the environment no matter what 2018 may bring.
Q: What are some of the major misconceptions you see that advisors have about alternative investments?
SC: A couple of misconceptions come to mind. The first would be that illiquidity or alternatives are intrinsically inferior planning tools. Another would be the challenges around compliance and regulatory scrutiny.
Q: Ok – let’s address the liquidity issue first.
SC:
I don’t believe that liquidity is the true issue. If a client’s portfolio is well diversified including appropriately positioned liquid and illiquid investments, then the illiquidity can actually be a true positive. It can prevent clients from selling investments when their motivation is emotionally-driven or reactive to the market.
Second, some people use the generalized claim that alternatives haven’t performed well over the last several years. As with all securities, some do well and some do not – and as with other investments there have certainly been a share of alternatives that haven’t performed as expected. However, there are a lot that have performed well when diligence has been taken in selecting and vetting – and they have been sold correctly. If a key goal is for alts to be used as a portfolio stabilizer, then we wouldn’t have seen them stand out during the crazy bull markets we’ve experienced. That’s not one of their key purposes. Many advisors want a significant premium for the illiquidity, but I don’t believe you should expect to get both the downside market protection in a bear market and returns that exceed the average in bull markets from the same vehicle.
It’s a challenge for me when I hear the expectation of alts always having to perform. Stocks lose value all the time. It really comes down to making sure these products are properly sold and positioned within client portfolios; and – as with all investments – conducting the best possible research and diligence to select best in class.
Q: You mentioned compliance – we know that compliance is often an issue for advisors in considering alternative investments and regulatory scrutiny continues to increase. What is your experience with compliance issues?
SC: Compliance is one of the things that motivated me to create AI Insight in the first place. I wanted to build capabilities to facilitate due diligence and proper compliance along with education and documentation of these efforts when selling complex products – those products that the regulators have called out as needing heightened supervision or training.
From a company perspective, we have found in any situation of which we’re aware, if you stay up-to-date on the requirements around selling any type of investment – and make sure everyone involved is aware of their obligations, adhering to the process, plus documenting all efforts – then the regulators are generally satisfied. That’s been our experience with our clients and their audits.
If you fail to make these efforts up front and you’re inconsistent in how you conduct your business from a compliance perspective, you’re just leaving yourself open to trouble from a client who ends up unhappy about something or getting in the news for the all the wrong reasons.
Q: You are involved in mentoring young women in the financial industry. Tell us about it.
SC: A group of members of the Investment Program Association (IPA) formed the Women’s Initiative Network (WIN). One of our key goals has been to help promote and support women within the financial services industry, which traditionally has been very male-dominated. I launched our first local initiative with Ohio State University’s Fisher School of Business this past year. We had a group of young women who had an interest in Financial Services get together once a month to hear stories about the journeys of women in our area who have been successful in the financial world.
We talked through some of their concerns and real-life challenges they’ve encountered or that we, as mentors, have experienced. We also introduced them to many unknown and non-mainstream facets of the investment world, which was really exciting.
Q: What is your focus for 2018?
SC: From a business owner’s perspective, ensuring that our team and our product continues to maintain consistent integrity of value and exceptional service; this is the backbone of our business – and making sure that our AI Insight team is challenged and fulfilled in their roles within our company.
From an industry perspective – we believe that there is a tremendous amount of value for advisors to differentiate themselves and bring really great opportunities through the thoughtful and diligent understanding of alternative products. We provide this value by building and bringing together our network of broker-dealers, advisors, RIAs, alternative investment firms and industry partners.
Therefore, as in past years, I always look forward to working with our business partners to explore new possibilities and find what more we can bring to the table for our customers in the new year.
As I’ve already mentioned, I’m excited about developing even more education and support in the liquid alternatives space. These funds are gaining increased awareness from a due diligence and compliance perspective. We currently have education and training for 30 closed-end funds available on our platform and expect to see real growth in this area in the coming year. We’ve expanded our CE course offerings to include a FINRA alternative mutual fund course and a course on interval funds. Plus, we’ve recently published a comprehensive white paper called, “Understanding the Complexities of Liquid Alternatives” to help support these growth plans in 2018. I’m really proud of our efforts when it comes to education on key industry initiatives and concerns, so we are particularly excited about the new plans around the liquid alts sector for the coming year. It’s important to our entire team that we continue to do our very best to evolve with the industry – hopefully always a few steps ahead of the primary curve – to bring our customers what they need to confidently offer their clients a full and rich palette of investment solutions. That’s our goal for 2018…and every year after!
Sherri Cooke is the CEO and founder of AI Insight, Inc. and has been in the financial services industry for over 25 years. Cooke formed AI Insight in 2005 with the primary goal of providing the financial planning community with a consistent database of alternative investment programs.
