FINRA Compliance

A Hybrid Solution for RIA’s and BD’s

A Hybrid Solution for RIA’s and BD’s Stymied by New Age Investors

Investment Advisor Services

Traditional BD and RIA firms are looking for a strategic solution to capture the growing market demographic of millennial investors and their predecessors, generations x, y, and z. This set of investors represent a younger client lifecycle of people who are technology savvy, family oriented, and ambitious. By the year 2020, the millennial group alone is expected to comprise 1-in-3 of the US adult workforce. Many in this demographic prefer the convenience of automated solutions that save time and money, yet they want to feel empowered and be able to take control at any time. This investor client type creates a difficult challenge for traditional RIA’s and BD’s geared toward providing personalized service to baby boomer clients; now aging out and spending down their retirement portfolios.

Making the leap to Fintech

Many traditional firms have watched in despair as their market share is lured off to robo-advisor firms that offer only virtual communication with clients – email, chat, forms. They find it difficult to understand how less interaction with clients equals more sales, when relationship building through personalized service was always the key. Compliance officers are stymied by lacking regulatory oversight for some financial products that are clearly a risk to investors; peer-to-peer lending, crowdfunding, bill paying apps, digital currency; and wonder when the hammer will drop.

First off, executives should know there is a peculiar difference in approach to financial services between start-up Fintech innovators and large investment firms entrenched in serving clients for decades. Fintech innovators get together with their IT team and ask, “how can we do this better than its being done”, whereas; investment firms entrenched in personalized service ask, “what will FINRA and other regulators do if we try this”. Fintech firms have the advantage of a limitless mindset and a regulatory blind spot. Innovators build computer technology and spend their lives crunching data and tasks down to bit-sized solutions. Professional investment firms pride themselves in setting the bar for customer risk models and regulatory compliance standards since before Dodd-Frank (2010).

In Walks a Hybrid Solution

So where does this leave mid-sized brokers or investment firms that don’t have a large enough client base to merit launching startup robo-advisor technology; or with limited resources that can’t develop a new IT platform for clients. Many firms are moving to join forces. For instance, Tradier Brokerage is partnered with Apex Clearing to provide full-service API that RIA firms use to base their own branded robo-advisory service on. Tradier fills in the missing IT piece for advisors by providing a seamless solution RIA’s can offer their clients. Clients experience a branded website and trade platform powered by Tradier; with clearing capability, funding and deposit service, trading access, and account portfolio information. Tradier Brokerage keeps RIA’s  brands top of mind for clients with co-branded statements, confirmations, and emails, plus provides custody, clearing, execution, and billing services too.

How does it Work – API, Application Programming Interface

API’s are the latest and greatest thing in computer technology. API ‘s are flexible solutions that dictate how computer software programs interact with each other. When 2 unique software programs interact digitally with each other, API defines what functionality and information is available such as; how the information is used and what formats are accepted for input and output. Many Financial Technology App’s developed today are based on API data streaming such as; managing customer trades, analyzing market data, mobile banking apps, ATM’s, and even regulatory compliance software.

Why is this Important?

One advantage to development using an API interface is they are easier to map with other computer systems and differing technology, whereas legacy systems used by large established financial service firms are often clunky, restrictive, and based on outdated technology or inefficient computer processing technology that doesn’t map well with API.

API based programs like the one offered by Tradier-Apex are a great way for mid-sized brokers and investment firms to enter Fintech and capture millennial and X-Y-Z market share today, which will equal long lifecycle investment clients tomorrow. Even better, mid-sized firms are well positioned to provide both the API solution as well as personalized services because they have a strong understanding of value created in collaboration with clients on investment choices and trust garnered in relationship building that simply cannot be established using robo-advisor services alone.

Discover more  for Fintech solutions for broker-dealer or RIA firm.


RND Resources Inc assists start-up and established firms with compliance solutions, audit support, and consulting. Our Sentry Compliance Software-as-a-Service solution creates a collaborative environment where compliance staff, representatives, and executives can manage outstanding tasks from a personalized compliance dashboard. 

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