Two Impending Challenges for Financial Services

Two Impending Challenges Facing the Financial Services Industry

The (entire) financial services industry is faced with two impending challenges that will undoubtedly hit institutions, advisory firms, and advisors like a freight train if they remain unprepared or so choose to ignore them.  
Both issues deal with the aging population and significantly impact both the current and the future state of wealth management—along with what it means to provide not only an elevated (digital) client experience but an experience that is optimal for your clients and to protect their future.

It’s critical for firms and wealth professionals to not only acknowledge the significance of these issues but also to work closely with industry peers and solution providers to overcome their challenges. 

The Aging Population & Dementia Are on the Rise   

Let’s talk statistics.

Over the next decade, U.S. demographics are projected to transform. According to the U.S. Census Bureau, the entire Baby Boomer generation will be over the age 65 by 2030, which also means that 1 in every 5 Americans will be of retirement age. As an institution and especially as a wealth advisor, how will you protect your senior clients?

Additionally, according to the World Health Organization, Dementia sufferers are projected to rise in numbers to an alarming 78 million by 2030 and 139 million by 2050. 

We know first-hand that wealth management firms and financial advisors are beginning to feel the stress of whether their aging clients are beginning to show early signs of Dementia or not. 

The stark reality is that Advisors are not equipped to make a proper assessment and nor should they be. However, to make things worse, many of the current systems and methods used to protect clients, their information assets (Documents), and importantly their financial assets, are instituted as reactive measures. 

A proactive step for both senior clients and for those showing signs of Dementia would be to establish a Trusted Contact. While your client may have an existing power of attorney (POA), a Trusted Contact serves as an extra resource for prompt and decisive action in cases of diminished financial capacity or potential fraud.

What is a Trusted Contact?

A Trusted Contact is a contact designated by your client, granting them the authorization to communicate on your client’s behalf, covering the following:

1. Confirming your client’s current contact details.
2. Discussing your client’s mental or physical health status.
3. Addressing activities or potential signs of financial exploitation.
4. Handling other allowable circumstances under the law.

It’s crucial to distinguish that Trusted Contacts do not act as representatives with the same authority as individuals holding POA or Durable POA.

Your client can choose any person who is at least 18 years old to be their Trusted Contact. Encourage them to select someone not already authorized to handle their affairs or receive information. Typically, Trusted Contacts are family members or close friends—individuals your clients trust and who are likely to be familiar with their current situation, as opposed to financial advisors or those with power of attorney (POA).

It’s vital to have both a Trusted Contact and someone with POA because, unfortunately, 90% of elder abuse cases involve family members or close associates. Remind your clients to keep this information up-to-date if circumstances change.

Regulatory Obligations: Trusted Contact Persons (TCPs)

FINRA Rule 4512(a)(1)(F) (Customer Account Information) requires firms, for each of their non-institutional customer accounts, to make a reasonable effort to obtain the name and contact information of a Trusted Contact Person (TCP) age 18 or older. FINRA Rule 4512 also describes the circumstances in which firms and their associated persons are authorized to contact the TCP and disclose information about the customer account.

Similarly, in July 2021, the Canadian Securities Administrators (CSA) introduced new guidelines that now require registrants to take reasonable steps to obtain the name and contact information of a Trusted Contact Person (TCP). This TCP would be someone advisors could alert if they have concerns about a client’s ability to make financial decisions or suspect their client is being exploited. This TCP would help advisors protect a client’s financial interests and assets. It’s important to note that a Trusted Contact Person does not have the authority to make transactions on a client in question’s account.

Protecting Your Clients with Trusted Advisor (Contact) Permissions in FutureVault

However, technology, such as Digital Vault solutions, exist to protect client information and documents, while enabling clients and Advisors to provide secure and trusted access to family members and third parties as a way of not only keeping confidential information safe but also sharing it with the right individuals, at the right time (and for the right amount of time via time-bound permissions) should they need access to critical information. 

Dementia is incredibly difficult for everyone involved; including financial advisors and fiduciaries. Tackling this issue at hand proactively checks off assurances and provides Advisors with the confidence they need to continue providing sound advice.  

The Great Wealth Transfer 

The second very real and impending issue facing the industry is the intergenerational transfer of wealth, also known as The Great Wealth Transfer
This mass movement of wealth transferring to younger generations is going to massively shake up the entire industry. Perhaps one of the most alarming factors impacting traditional wealth management firms is what we know about The Great Wealth Transfer with a reported more than 70% of heirs looking to fire or change financial advisors after inheriting their parents’ wealth according to Cerulli Associates.
For Financial Advisory firms and RIAs, Broker-Dealers, Family Offices, Credit Unions, Banks, you name it, it simply means this; digital capabilities are no longer a “nice-to-have”—they are emerging as a central value proposition for the new generation of investors.  

Here are three important considerations to help Advisors prepare for the Great Wealth Transfer:  

  1. Implementing a robust, client-focused, digital-first strategy is a must;
  1. Financial (and digital) literacy is fundamental for everyone involved including the next generation;  
  1. Firms and Advisors must look for opportunities to deepen client relationships by providing value to spouses and family members.  

For firms looking to grapple and “win” The Great Wealth Transfer, here are seven tried-and-true strategies that the top-producing firms and advisors are leveraging to retain generational relationships and assets.

One of those strategies is an investment in best-of-breed technology that appeals to current clients and the next generation. Above all, what we’re continuing to notice and see play out is the Digital Vault becoming the linchpin in estate, succession, legacy, and wealth transfer conversations and situations with clients.

Overcoming Impending Challenges 

With respect to both impending issues, the aging population and dementia, along with The Great Wealth Transfer, having the right systems, tools, and technologies in place, can and will equip firms and advisors to confidently address these challenges head-on while remaining competitive, and importantly, winning the heart, mind, and wallet of the consumer. 
A Digital Vault platform like FutureVault is fundamental to the collection, preservation, maintenance, and protection of critical information and documents — enabling advisors and the firms/institutions that support them to “keep their house in order” while ensuring that an exceptional client experience is delivered at every intersection of client interaction. 

SEC Rule 17a 4 Requirements - FutureVault

Understanding SEC Rule 17a 4: Everything You Need to Know About Rule 17a-4 Requirements

The Securities and Exchange Commission (SEC) plays a very critical role in ensuring the integrity and transparency of the securities market. One regulation provisioned by the SEC is SEC Rule 17a4, commonly referred to as ’17a-4′.

Rule 17a-4 establishes specific requirements for recordkeeping and retention by brokerage firms and other financial institutions. In this article, we’ll provide a comprehensive overview of SEC Rule 17a-4 requirements, outlining its significance, key provisions, and compliance obligations, along with how technology like FutureVault is proactively helping institutions and Broker-Dealers confidently meet Rule 17a4 requirements.

Table of Contents

  1. Introduction to SEC Rule 17a-4
  2. Importance of SEC Rule 17a-4
  3. Key Provisions of SEC Rule 17a-4 (a) to (m)
  4. What is WORM Compliant Storage?
  5. Compliance Obligations under SEC Rule 17a-4
  6. Technology Solutions for SEC Rule 17a-4 Compliance
  7. The Future of SEC Rule 17a-4
  8. Rule 17a-4 FAQs

1. Introduction to SEC Rule 17a-4

SEC Rule 17a-4, formally known as “Retention of Records Relevant to Audits and Reviews“, was enacted by the SEC to ensure the preservation and accessibility of brokerage firm records. Rule 17a-4 applies to all Broker-Dealers registered with the SEC, including those engaged in securities trading, clearing, and self-regulatory activities. The rule aims to protect investors’ interests, facilitate audits and investigations, and maintain market stability.

2. Importance of SEC Rule 17a-4

SEC Rule 17a-4 is significant for a variety of reasons, importantly, for the two below:

First, Ruel 17a 4 enables regulatory bodies to conduct comprehensive audits and examinations to ensure compliance with federal securities laws. By mandating the retention of records, the SEC can evaluate the accuracy and integrity of financial statements, trade data, and client information, which ultimately serves to improve investor protection.

Secondly, Rule 17a-4 serves as a deterrent against fraudulent activities. The preservation of records provides a reliable source of evidence in case of investigations into potential market manipulations, insider trading, or other unlawful activities. It promotes transparency and accountability within the financial industry, safeguarding the integrity of the market.

3. Key Provisions of SEC Rule 17a-4

SEC Rule 17a-4 imposes specific requirements regarding the preservation and accessibility of records. The rule consists of three key sections (a to c) along with additional supporting sections that outline the obligations for recordkeeping.

Below is an overview and summarization of each section from (a) through to (m).

Record Retention Periods (Section 240.17a-4(a))
Under this section, brokerage firms are required to retain certain records for specific periods. These records may include trade confirmations, account statements, purchase and sale documents, and associated communications. The retention periods range from three to six years, depending on the nature of the record.
Media and Format Requirements (Section 240.17a-4(b))
This section of the rule outlines the acceptable media and formats for record storage. Brokerage firms must maintain records in a non-rewriteable, non-erasable format, ensuring that they remain unaltered and tamper-proof throughout the retention period. This requirement aims to prevent unauthorized modifications or deletions that could compromise the accuracy and integrity of the records.
Accessibility and Indexing (Section 240.17a-4(c))
To facilitate efficient retrieval and review, Rule 17a-4 mandates that records be readily accessible. Firms must be able to promptly produce requested records in a legible and organized manner. Moreover, the rule requires firms to create and maintain an index of the records, enabling quick identification and retrieval.
Verification of Records (Section 240.17a-4(d))
This section emphasizes the importance of verifying the accuracy and completeness of records. Brokerage firms are responsible for establishing and maintaining reasonable systems to verify the quality and reliability of their records.
Record Preservation (Section 240.17a-4(e))
Under this section, brokerage firms must take necessary steps to preserve records in a manner that ensures their integrity, durability, and accessibility throughout the required retention period.
Write-Once-Read-Many (WORM) Storage Requirement (Section 240.17a-4(f))
Section 240.17a-4(f) introduces the Write-Once-Read-Many (WORM) storage requirement. It states that certain records, including original books and records required to be preserved, must be stored in a non-rewritable, non-erasable format to prevent alteration or deletion. The WORM storage technology provides an added layer of security and integrity to the preserved records.

An official FINRA press release stated that many firms had failed to maintain electronic records in this format when they fined 12 firms over 14 million dollars due to a lack of proper protection from record alterations.

A recent amendment provisioned by the SEC states that Digital Audit Trails are an alternative to WORM storage and firms can forego WORM if they demonstrate and invest in audit trail technology.

FutureVault provides both WORM + Audit Trail capability providing the most cost-effective and effective solution.
Time for Production of Records (Section 240.17a-4(g))
This section specifies the timeframes within which brokerage firms must produce requested records for audits, investigations, or examinations conducted by regulatory bodies. Firms are expected to comply promptly and provide the requested records in a timely manner.
Record Location (Section 240.17a-4(h))
Section 240.17a-4(h) relates to data and documentation residency and requires brokerage firms to maintain records at a designated location within the United States or have the records readily accessible from such a location.
Furnishing Copies of Records (Section 240.17a-4(i))
Under this section, brokerage firms must be able to furnish legible, true, and complete copies of requested records upon request by the SEC or other designated regulatory bodies.
Temporary Substitutes for Original Records (Section 240.17a-4(j))
In certain circumstances, firms may create temporary substitutes for original records, but they must ensure that these substitutes accurately and completely reproduce the original records. The temporary substitutes should be readily retrievable and must meet the requirements specified by the rulefor their preservation.
Indexing (Section 240.17a-4(k))
Brokerage firms are required to create and maintain an index of their records. The index should provide sufficient detail to allow for quick and easy identification and retrieval of specific records.
Record Maintenance (Section 240.17a-4(l))
This section emphasizes the need for brokerage firms to establish and enforce policies and procedures to ensure the proper maintenance and preservation of records in accordance with SEC Rule 17a-4.
Definitions (Section 240.17a-4(m))
Section 240.17a-4(m) provides definitions for various terms used in SEC Rule 17a-4 to ensure consistent interpretation and application of the rule’s provisions.
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4. What is WORM Compliant Storage?

Section 17a4(f) of SEC Rule 17a4 references and provisions WORM Storage, which stands for ‘Write Once, Read Many’. WORM storage mandates that firms maintain and preserve electronic records exclusively in a non-rewriteable, non-erasable format so that critical documentation cannot be tampered with once created, meaning that data is immutable once stored. Data can be written to the storage a single time, and afterwards, no one can change that data in any way.

5. Compliance Obligations under SEC Rule 17a-4

Compliance with SEC Rule 17a-4 is not optional; it is a legal obligation for brokerage firms. Failure to adhere to the rule’s requirements can result in severe penalties, including fines, suspensions, or even revocation of registration.

To satisfy compliance and meet 17a-4 requirements, firms must implement robust recordkeeping practices and consider adopting a secure digital vault solution to ensure the secure storage and retrieval of records.

6. Technology Solutions for SEC Rule 17a-4 Compliance

Given the growing complexity and volume of data and documentation, technology is increasingly playing a critical role in helping firms meet SEC Rule 17a-4 compliance.

Firms should leverage advanced recordkeeping systems, such as electronic document management platforms and cloud-based storage, to securely store and manage records. These solutions offer features like encryption, access controls, and automated indexing, streamlining the compliance process and reducing the risk of non-compliance.

Digital Vault solutions like FutureVault help institutions and firms confidently meet SEC Rule 17a-4 requirements by providing secure storage, advanced encryption, and user-friendly interfaces that enable organizations to organize, index, access, and retrieve records in accordance with SEC regulations. By leveraging the Vault (FutureVault), firms can streamline compliance efforts and ensure the integrity of their books and records.

Meet 17a4 compliance with FutureVault

7. The Future of SEC Rule 17a-4

As the financial industry continues to evolve, SEC Rule 17a-4 is expected to adapt to emerging technologies and changing market dynamics. It is very likely that the SEC will continue to introduce amendments to address challenges posed by digital assets, distributed ledger technologies, and growing cybersecurity risks.

It should go without saying that it is absolutely critical for brokerage firms to stay informed about any updates or amendments to SEC regulations and adjust their compliance practices accordingly. Additionally, partnering with the right technology partner(s) can and will help your firm stay on top of any and all amendments that may consequently impact overall business operations and client engagement activities.

8. FAQs

Q1. What is the purpose of SEC Rule 17a-4?

SEC Rule 17a-4 aims to establish recordkeeping and retention requirements for brokerage firms, enhancing investor protection and facilitating audits and investigations.

Q2. Which firms must comply with SEC Rule 17a-4?

SEC Rule 17a-4 applies to all Broker-Dealers registered with the SEC, including those engaged in securities trading, clearing, and self-regulatory activities.

Q3. What are the consequences of non-compliance with SEC Rule 17a-4?

Non-compliance with SEC Rule 17a-4 can result in penalties, including fines, suspensions, or revocation of registration.

Q4. What technology solutions can help achieve SEC Rule 17a-4 compliance?

Technology solutions such as Digital Vaults, like FutureVault, provide effective means for brokerage firms to achieve SEC Rule 17a-4 compliance. These platforms offer secure storage, advanced encryption, and user-friendly interfaces that assist in organizing and indexing records according to SEC requirements.

Q5. How can brokerage firms ensure ongoing compliance with SEC Rule 17a-4?

Brokerage firms can ensure ongoing compliance with SEC Rule 17a-4 by implementing robust recordkeeping practices, leveraging technology solutions like Digital Vaults, regularly conducting audits, and staying informed about updates or amendments to SEC regulations.

Secure Digital Vault Technology - What is a Digital Vault - FutureVault

What is a Digital Vault? A Guide to Digital Vault Technology 

Digital Vaults have become a fundamental component in the modern technology stack within financial services and wealth management, moving away from a “nice-to-have” to an absolute must-have piece of technology to safeguard, manage, and handle sensitive enterprise, advisor, and client documentation. 

When the right Digital Vault technology is implemented, these platforms can materially transform the way firms organize, manage, store, and deliver client-facing documents; onboard and retain clients; attract talent and elite advisors; manage compliance and audit readiness; and provide advisors with a competitive edge to materially improve the engagement and relationship they have with new and existing clients—and their families. 

This guide provides an overview of all things Digital Vault technology and importantly, answers common questions including, “What is a Digital Vault?”, “Who are Digital Vaults for?”, and even “What are the benefits of using a Digital Vault?”.  

Table of Contents 

1. What is a Digital Vault? An Introduction to Digital Vaults 
2. How Does a Digital Vault Work? 
3. Are Digital Vaults Safe and Secure? 
4. Why Digital Vaults Matter in Financial Services 
5. Who are Digital Vaults for? 
6. What Types of Documents Should Go in a Digital Vault? 
7. Not All Digital Vaults are Created Equal 
8. Conclusion 
9. FAQs 

What is a Digital Vault? An Introduction to Digital Vaults 

A Digital Vault is an online security vault; it is the virtual equivalent of a safety deposit box to store and safeguard critical documents, data, and information. Much like a physical vault is used to store and protect valuable physical assets, such as money, banknotes and certificates, jewelry, physical documentation, and more, a Digital Vault is used to safeguard important and valuable digital assets; namely files and documentation. 

For individuals — those who are often clients of financial services and wealth management firms — Digital Vaults provide an additional level of confidence in knowing that personal data and information is kept safe and secure. 

Common documents and items included within a Digital Vault are financial statements (those delivered from institutions to clients), banking and account information, financial and estate plans including Wills and Trusts, legal information, insurance policies, real estate and mortgage-related documentation, personal identification such as Driver’s Licenses and Passports, and more. 

While Digital Vault technology provides operational, administrative, and compliance benefits at the enterprise and front-office level, they serve to provide value for clients via managing their personal life’s content securely and efficiently, at their fingertips. 

“Digital Vault platforms are becoming the next iteration and the future of secure document management by providing firms (and their advisors) accountability, efficiency, structure, compliance, and protection—all areas that enable organizations to scale document management practices across the many levels of their organization, and most importantly, to extend and enhance the value proposition delivered to their clients.” 

Kristian Borghesan, CMO at FutureVault 

How Does a Digital Vault Work? 

A Digital Vault keeps information and documents organized in one centralized location, ultimately serving as the secure single source of truth, and making information and documents accessible anytime, anywhere.  

Digital Vault platforms are much more than simple document storage repositories; individuals, financial advisors, and enterprise administrators can share files with different parties from one central location and provision different roles and levels of access when and where needed.  

More advanced and leading Digital Vault solutions like FutureVault are known for robust document exchange functionality, scalable structuring of folders and files, advanced permissions, along with automation capabilities to deliver and upload important information and documents from a variety of sources (custodians, planning software, CRMs, etc). 

Are Digital Vaults Safe and Secure? 

Digital Vaults have grown in significance and popularity, especially within financial services, largely due to their modern and best-in-class security measures along with top-tiered Vault solutions meeting regulatory requirements for data privacy to safeguard enterprise and client documentation.  

A Digital Vault is much more than a secure storage solution for your important documents; it is a robust platform for secure document handling to facilitate document exchanges taking place between multiple parties, in one centralized environment. Digital Vaults provide a safe environment for storing critical documents such as agreements and account information, investment statements, estate plans, and personal records. 

Most Digital Vault solutions reside in the cloud and leverage all the benefits of data availability, redundancy, and low storage costs. More importantly though, Digital Vault platforms, and notably the FutureVault platform, leverage institutional-grade security with modern encryption (in transit and at-rest) to confidently protect those documents, data, and digital assets within a secure environment. 

If your institution and firm is assessing a Digital Vault solution, look for those that actively maintain certifications such as SOC 2 Type II compliance, demonstrating their commitment to preserving and protecting enterprise and client documentation.  

Why Digital Vaults Matter in Financial Services 

As the amount of sensitive information, data, and documentation that institutions, firms, advisors, and/or clients deal with daily continues to multiply along with the growing reliance on secure document handling processes (and tools) for both operational and compliance purposes, the role of a Digital Vault is quickly becoming one of the most important pieces of technology for modern firms, institutions, professionals, and their clients.  

Digital Vaults have become an unequivocal must-have technology, equipping institutions, firms, and professionals with structure, security, and efficiency to streamline and automate document-driven processes and deliver tremendous value to clients. 

Digital Vaults are ‘central’ to all things data, information, and documentation that span across the enterprise, advisor, and client relations. In many cases, Digital Vaults have proven to be the linchpin for advisors and firms looking to navigate the intricacies of estate, legacy, succession, and wealth transfer planning. 

Notably, Digital Vaults solve many of the legacy and traditional document management and document handling challenges by providing robust functionality that goes well beyond simple document storage and management. 

1. Digital Vaults Provide Structural Brilliance 

Digital Vaults provide structure and organization that allows institutions and firms to handle large volumes of data and documents that span across the different levels and stakeholders of the organization, while importantly provision secure access to client documentation when and where needed, at scale.  

Solutions like FutureVault make it easy to standardize folder structures and file management templates for the enterprise, for the front office, while also allowing for different folder and file structure templates to be created and managed for different client segments (estate planning client, insurance-only client, high net worth clients, ultra-high net worth clients, etc.).  

FutureVault’s multi-tiered Digital Vault is purpose-built for all levels of an organization and for every stakeholder – this allows for secure access to information, where delegated and provisioned, by home office and back-office teams, by advisors and front office teams, and by clients and family members.  

2. Digital Vaults Enhance Security and Compliance  

Information security and compliance are table stakes for top-tiered Digital Vault solutions. By employing cybersecurity best practices, institutional-grade security, advanced and modern encryption protocols (in transit and at-rest), and multi-factor authentication, Digital Vault solutions like FutureVault help ensure that sensitive data remains safeguarded from unauthorized access. 

With respect to regulation, it’s important that the Digital Vault your institution and firm moves forward with adheres to and meets data residency, data redundancy, disaster recovery, and document retention requirements set forth by regulatory bodies, including FINRA and the SEC (such as SEC Rule 17a4).  

3. Digital Vaults Lead to Operational Efficiency Gains 

Paperwork and document handling are a necessary evil for financial services and wealth management firms. Documents are tightly tied to many internal and external processes that often involve accessing, requesting, sharing, and managing a wide array of different types of information and documents.  

Digital Vault solutions provide efficiency by improving document-driven workflow, ultimately freeing up professional time and capacity, saving money, and building trust with clients. 

Common use cases include automating the delivery of statements to advisors and clients; eliminating the back-and-forth manual exchanges and non-compliant file-sharing methods; standardizing the document collection process; streamlining onboarding processes, providing trusted collaborators and third parties with secure access to key portions within vaults to streamline workflow. 

4. Digital Vaults Elevate Advisor and Client Experiences 

The digital experience for Advisors and clients is more important now than ever and having the right set of digital tools in place is becoming an expectation amongst all cohorts. Digital Vault solutions like FutureVault can help provide additional value in this area, especially when it comes to moving away from legacy systems and paper-based workflow.  

Digital vault technology will become the centerpiece of financial services and information management. Digital Vaults are poised to become one of the single most important pieces of the modern tech stack within financial services and wealth management. In essence, the vault construct ‘connects the disconnected’ within organizations leading to massive efficiency gains and cost savings while at the same time introducing a new value proposition paradigm for enterprises, advisors, and their clients. 

G Scott Paterson
Founder & Executive Chairman (Quoted July 2018)

Who are Digital Vaults for? 

Types of Firms Using Digital Vaults  

While Digital Vault technology is and will become industry-agnostic, we are witnessing massive interest, adoption, and use cases within the financial services and wealth management industries. 

With the number of document-drive processes, both internal and external, that take place daily, along with how connected documents are to client servicing, it should come as no surprise that there is a large affinity for Digital Vaults within these industries.  

Below are the types of organizations and firms actively using or beginning to use Digital Vault technology across the back office, front office, and with clients.   

The Key Stakeholders Using Digital Vaults  

Traditional and legacy-based document management tools often focus on providing value to one function or ‘level’ of an organization; usually, that ends up being either a back-office and compliance focus or on the advisor. This results in a very disconnected document handling workflow across front, middle, and back-office teams along with key stakeholders involved in the process chain.  

Advanced and leading Digital Vault solutions like FutureVault offer an innovative approach to managing documents and the processes that they’re involved with through a multi-tiered solution where all constituents involved — front, middle, and back-office teams, along with clients and households – benefit and gain tremendous value by having access to the critical information, data, and documentation that is relevant to them and their role.  

  • Home office and back-office teams: View and manage Advisors and advisory teams, along with the document exchanges that take place between advisors and their clients, in addition to the Head Office being able to deliver documents securely (and in many cases with automation) to both advisors and clients. This provides compliance officers with an extra degree of confidence knowing compliant document handling activities are taking place. 
  • For front office teams and financial advisors: Having secure administrative access makes it easy to manage clients while securely exchanging, collecting, and managing critical client files and information within one centralized location. This reduces and eliminates significant time spent on manual document-related tasks and compliance risks, while streamlining document workflows to efficiently scale and build more trust with clients. 
  • And lastly, clients reap the ultimate benefit of being able to manage their personal life’s content securely and efficiently, at their fingertips, by having access to their own vault (what we refer to as the Personal Life Management Vault), materially improving collaboration and engagement with not only their financial advisor, but with their centers of influence and other Trusted Advisors. 

What Types of Documents Should Go in a Digital Vault? 

The types of documents that get stored in a Digital Vault will ultimately come down to the need for both the firm and the individual (client), and importantly will be heavily influenced by compliance and internal policies for recordkeeping and retention.  

With that being said, it is recommended that the following documents be uploaded and securely stored within Digital Vaults to make sure that you have quick and easy access to critical information, data, and documentation when and wherever you need it. 

  • Financial and investment documentation: Monthly investment statements, quarterly and annual performance reports, account opening information, and more.  
  • Estate Planning Documents: Wills, Trusts, Power of Attorneys, etc. 
  • Legal agreements: Divorce certificates, child custody agreements, bankruptcy filings, and other legal documents. 
  • Client Profiles: Meeting notes, presentations, and other detailed client information. 
  • Regulatory Documents: Documents required for compliance and reporting are securely stored for easy retrieval. 
  • Insurance Documents: Life insurance, health insurance, property insurance, auto insurance, and other insurance coverage documentation. 
  • Tax Documents: Tax filings, tax returns, W2/T4 forms, 1099s and other tax-related documents. 
  • Personal Identification: Passports, driver’s licenses, social security cards, and other government-issued identification. 
  • Business Documents: Articles of incorporation, partnership agreements, operating agreements, business financial statements.  
  • Medical Documentation: Health records, prescription information, medical test results, and vaccination records. 

Not All Digital Vaults are Created Equal 

PSA: Not all Digital Vaults are created equal.  

If you or your firm are currently evaluating Digital Vault technology, it’s important to call out and mention here that many so-called ‘Digital Vault’ solutions are nothing more than a basic feature set within a larger product.  

If your firm or enterprise is relying on this as a scalable solution, chances are you’re in for some trouble down the road. These Vault ‘features’ serve nothing more than being a light document storage and dumping ground and should in no way be considered or classified as a true Digital Vault solution. 

Advanced Digital Vault solutions (FutureVault) far exceed basic document storage capabilities; they offer efficiency for both back and front-office teams while enhancing digital client experiences. 

Here’s where Digital Vault solutions stand and differ from basic document management or document storage repositories:  

  • Multi-Tiered Access: For a multi-leveled organization which might include credit unions and banks, broker-dealers (investment dealers), Multi-Family Offices (MFOs), and even large Registered Investment Advisors (RIAs), this is the most effective, efficient, and compliant way to store, access, and manage enterprise and household documents in one centralized platform. The concept of multi-tiering moves away from a one-way, inefficient, rigid document “feed” to a secure, collaborative, flexible, multi-way document exchange platform. 
  • Structure & Organization: Advanced vaults like FutureVault make it easy to create standardized folder templates and file structures, along with offering different folder types and ‘areas’ within the Vault to support internal and external processes, workflow, and access. 
  • ➜ Essential (business relationship between firm/advisor and client) 
  • ➜ Personal (personal and household client documents) 
  • ➜ Private (documents such as meeting presentations that may be private to the client) 
  • ➜ In Review (documents here are in an ‘in review’ queue before being published to client Vaults) 
  • ➜ Global (a universal folder across your clients – imagine uploading one document such as a monthly commentary that then gets delivered to all clients) 
  • ➜ OBA (Outside Business Activity folders may be private to the Advisor and not viewed by the Home Office, but accessible to Clients doing business with them)  
  • Tagging & Labeling: Advanced Digital Vaults allow for both basic and sophisticated document (and folder) tagging using metadata and along with Entities (a patented FutureVault feature) to associate documents to different people, businesses, properties, or accounts, along with being able to add labels to folders and documents to improve document workflow, visibility, and overall management.
  • Advanced Permissions: This is what our team refers to as Trusted Advisor Permissions, which also happens to be a patented platform feature. Empower the collaboration process through secure permissioning, allowing Trusted Advisors (collaborators) to access specific areas, with specific roles and permission within one or many Vaults. All activity on documents (viewing, sharing, downloading, etc.) is tracked in real-time and recorded with Audit Trails.  
  • Document Automation: Automate critical documents, such as financial statements, onboarding documentation, performance reports, and more from a variety of third-party tools and systems by leveraging Open APIs and Bulk Upload capabilities. When your firm deals with thousands of households and hundreds of thousands of documents, being able to leverage a leading Digital Vault solution to automate documents saves an enormous amount of administrative and back-office time.
  • Regulatory Confidence: Advanced Digital Vault platforms, such as our multi-tiered digital vault solution, meet data residency, data redundancy, document retention, and disaster recovery requirements while providing the flexibility and structure needed to effectively store, access, manage, and archive documentation required to be evidenced. Digital Vaults offer head office teams and compliance officers oversight on document handling activities at scale, across all levels of the organization. 
  • Enhanced Client Experiences: Tailor unique experiences by providing clients with secure access to personalized documents and financial information. The bottom line is this, the households and families you work with should not have to ask you how or where to access their documents or feel like they need to jump through hoops to find them. Your clients should be able to freely access their critical documents and information across the household, across multiple entities, and across multiple geographies, any time, anywhere, at their convenience. That is the power of providing your clients with a client-facing digital vault, the Personal Life Management Vault™. 

What we’re seeing play out in real-time is that the Digital Vault is becoming the centralized location, and the secure single source of truth for not only client files but also for compliance and corporate documentation. This ensures that ‘final’ documents are safeguarded within an audit-ready, centralized location. 


In today’s modern world of financial services and wealth management, embracing cutting-edge technology is no longer optional – it’s fundamental and table stakes.  

Secure Digital Vaults have emerged and evolved as transformative tools, augmenting security and compliance, optimizing operations, and delivering unparalleled value to professionals and clients.  

As you navigate this dynamic landscape, remember that a secure Digital Vault isn’t just a solution; it’s a strategic competitive advantage that will help your firm create massive efficiencies and create a strategic moat, especially in the era of The Great Wealth Transfer.  

But buyers beware. Not all Digital Vaults are created equally.  


Q1: What is a Digital Vault? 

A Digital Vault is an online security vault; it is the virtual equivalent of a safety deposit box to store and safeguard critical documents, data, and information. Much like a physical vault is used to store and protect valuable physical assets, such as money, banknotes and certificates, jewelry, physical documentation, and more, a Digital Vault is used to safeguard important and valuable digital assets; namely files and documentation. 

Q2: How do Digital Vaults enhance security? 

Digital Vault solutions reside in the cloud and leverage all the benefits of data availability, redundancy, and low storage costs. More importantly though, Digital Vault platforms, and notably the FutureVault platform, leverage institutional-grade security with modern encryption (in-transit and at-rest) to confidently protect those documents, data, and digital assets within a secure environment. 

Q3: Who benefits from Digital Vaults? 

Digital Vaults offer immense value to broker-dealers, advisory firms, family offices, insurance distributors, accounting firms, credit unions, banks, and their professionals and clients. 

Q4: What documents should be stored in a Digital Vault? 

Documents such as financial statements, legal agreements, client profiles, and regulatory documents are ideal for secure storage in a Digital Vault. 

Q5: How do Digital Vaults go beyond basic storage? 

Digital Vaults offer trusted advisor permissions, document automation, and enhanced client experiences, revolutionizing operational efficiency and client interactions. 

7 Wealth Transfer Strategies to Win Over the Next Generation - FutureVault

7 Proven Strategies to Win at The Great Wealth Transfer

According to Cerulli Associates, wealth transferred through 2045 will total an estimated $84.4 trillion. More than $53 trillion of this amount is estimated to be transferred from households in the Baby Boomer generation, representing a whopping 63% of all wealth transfers. 

Perhaps more significant, or alarming, is that more than 70% of heirs to this wealth are likely to fire or change financial advisors after inheriting their parents’ wealth. On the high end, we’ve seen this number be quoted as high as 88%.  

This has massive implications on how firms approach all areas of their business, including technology, to engage with and attract the next generation of investors and clients. Not to mention that the majority of advisors are not prepared to engage with the next generation; some of them, not in the slightest.  

This impending challenge also presents a real opportunity for firms and advisors to demonstrate their value and cement trust across generations.  

So, given what we know about The Great Wealth Transfer, what exactly should firms be doing — or rather — what are the top-producing firms and advisors doing right now to win over this next generation of clients?  

7 Proven Strategies to Win Over the Next Generation 

Based on countless conversations with firms, advisors, industry experts and consultants, in addition to reviewing and familiarizing ourselves with surveys and reports, we’ve identified the below 7 tried-and-true strategies to engage with and improve chances of retaining the next generation as clients.  

1. (Re)Aligning Business Values, Practices, and Resources 

First and foremost, wealth management firms (wirehouses, credit unions, IBDs, RIAs, Family Offices, you name it) and financial advisors absolutely must to take a step back to realign their business values and ensure that they meet the values and goals of this next generation. 

There are four critical areas that your firm should be evaluating and re-evaluating on an ongoing basis.

1. ➜ Business Processes 
2. ➜ Communication Channels 
3. ➜ Engagement and Service Models 
4. ➜ Human Resources 

Of these four areas, what we’ve found is often very overlooked is human resource allocation. 

The question to ask yourselves internally is, “Do we have the right staff and advisors to effectively engage with the next generation?”.  

Recently, our team met with a mid-sized RIA, who openly acknowledged that their firm felt they were unequipped to adequately engage with the next generation. As a result, they ended up hiring two young, up-and-coming associate advisors who had much more in common with their younger clients and soon-to-be clients. These next gen advisors are now responsible for much of the wealth transfer conversations wherever and whenever the next gen is involved and for any young prospective clients that are interested in working with the firm.  

While there may be several examples like the above taking place across the industry, it really still is a topic that needs to be talked about.  

In fact, one of the key takeaways from’s recent research on Wealth Transfer Strategies, highlights the importance of a “fresh face”, stating that firms need to hire young advisors who can appeal to younger clients.  
According to the study, only 13% of smaller firms are deploying this strategy, versus 50% of the larger firms. One advisor (from an RIA) referenced in the report said that “not having enough young advisors” had prevented their firm from attracting and serving more young clients. 

2. Intergenerational Continuity Planning 

An intergenerational continuity plan is a comprehensive financial plan outlining how a family’s wealth will be managed and transferred to soon-to-be heirs and future generations. 

This plan provides a detailed roadmap for managing and transferring wealth that aligns with the family’s goals and objectives. 

Creating and maintaining an intergenerational continuity plan not only helps to retain assets, but importantly facilitates the transfer of knowledge, expertise, and critical information to family members, and in doing so, to Advisors as well.  

It’s really the information, data, and documentation that is foundational to everything and paves the way for pieces of the plan to come together.   

This is exactly why having a structured information management plan (and a digital vault, notably) in place and providing family members with access to this information is one of the biggest components of any continuity and succession plan.  

Below are the 5 key “steps” or components of an Intergenerational Continuity Plan:

  1. ➜ Understand clients’ goals and objectives 
  1. ➜ Involve key family members (and Trusted Advisors
  1. ➜ Develop the intergenerational plan 
  1. ➜ Educate clients and the next generation 
  1. ➜ Monitor, review, and adjust the plan 

3. Hosting Multi-Generational Family Meetings 

Family Meetings are a tried-and-true approach that plays an incredibly important role in helping advisors create an intergenerational continuity plan while making sure that the plan is maintained.  

Family Meetings, when done right, should encourage necessary family members to participate in discussing critical areas such as goals and values, transfer strategies, legacy and estate discussions, family assets and wealth, and more. 

The benefits you gain from hosting family meetings speak for themselves:

  • ➜ Retention of relationships and assets;  
  • ➜ A better understanding of family dynamics and information;  
  • ➜ Building generational trust;  
  • ➜ Increasing the value of your practice and preparation for your own succession planning as an advisor  

Advisors in financial services and wealth management have a unique opportunity to foster meaningful family discussions and ensure smooth wealth transitions by following the below 6-step “blueprint” to hosting Family Meetings:

  1. ➜ Preparation 
  1. ➜ Creating a safe environment for the family 
  1. ➜ Establishing the family’s goals and their values 
  1. ➜ Educate and empower clients and the next generation 
  1. ➜ Develop the Wealth Transfer Plan 
  1. ➜ Ongoing documentation and review  

As you’ll see, Intergenerational Continuity Planning and Family Meetings have a lot of overlap. To maximize your output and return, these two should be carried out in tandem as part of the overall strategy.  

An important consideration and takeaway: Your role as the Advisor in these Family Meetings is not to hijack them or focus on your agenda — you are acting as the family’s Trusted Facilitator. It is your job to facilitate the conversation, to make everyone feel comfortable, and to encourage dialogue and participation from family members that will ultimately serve to help everyone in the family better understand the dynamics that will lead to a successful wealth transfer. 

Yes, Family Meetings can be a lot of work. But the reward is invaluable.  

4. Engage with the Spouse 

Do you or does your firm have any sort of relationship with your clients’ spouses at all?  

Unfortunately, the majority would answer no to this question.  

The spouse is frequently overlooked and often excluded from the overall financial picture and relationship with the family’s financial advisor. This oversight can be detrimental to the overall well-being of the family’s financial situation — and for several reasons. One of the most critical reasons is that neglecting the spouse’s involvement can result in an incomplete understanding of the family’s financial dynamics and overall goals, leading to incomplete and less-than-ideal planning.  

Including the spouse in things such as quarterly or annual meetings and plan, reviews is key for firms and advisors to build trust and maintain long-term relationships with the family. By recognizing the spouse’s role and actively engaging them in the financial planning process, advisors demonstrate a commitment to the family unit, fostering a sense of inclusivity and collaboration. This approach not only helps ensure that all stakeholders are heard and understood but also provides a comprehensive view of the family’s financial objectives, enabling advisors to tailor their strategies more effectively.  

When in doubt, look for opportunities to deepen relationships and establish trust. What we’ve seen is that client appreciation events can make for a great way to encourage participation and meet additional family members. Hint: make these events about your clients, not your firm.  

5. Engage with and Educate Clients (and the Next Generation) 

Fact: Lack of communication and engagement is the number one reason clients leave their Wealth Advisors. 

Basic financial literacy and education build trust, lead to financial wellness, and importantly, go the extra distance with the next-gen. 

But it’s not just any type of communication and ”education” that clients crave and seek, it needs to be tailored. It needs to be specific and personalized. And it needs to be relevant to them, to their current and future lifestyle.  

When it comes to the top advisors and top firms, they’re active — they’re using digital channels to communicate several times a month with their clients and with their prospects.  

A really important takeaway here is to think about how your firm is currently communicating with clients and to ask if there is an opportunity for more or rather, better, education that will help clients understand certain topics and then essentially bring them back to you. 

When you’re discussing this internally, approach it with a general framework of the ‘3 C’s’: 

  1. Content that you’re delivering 
  1. Channels that you’re communicating on (email, social, text); and  
  1. Cadence — how frequent is this communication and does it reflect or align with your client’s goals 

If you’re looking for support and technology to empower your comms and marketing engagement, there are lots of partners available to help. Fresh Finance provides a robust library of affordable educational content for events and ongoing communications, and ReachStack provides an easy way to deliver the right content to the right person at the right time. 

These programs deliver real impact for existing clients and importantly, for the next generation. Here’s a recent article showing the impact these programs can have for Wealth Management firms. 

6. Deliver Tax-Efficient Solutions 

Households are expected to transfer ~$85 trillion to their heirs and charities by 2045.  

As a result of the massive amounts of wealth transferring and being passed down generations, tax efficiency is becoming increasingly important given most of the wealth is held by older, high-net-worth (HNW) investors and will likely be subject to more expansive taxes in the coming decade. 

Firms that can remain on the cutting edge of complex planning and wealth structuring solutions will be invaluable to clients as taxation becomes a more pressing worry. And here’s what this looks like:  

  • Minimizing tax liability: High net-worth families often have a substantial amount of assets and wealth, and without careful planning, a large amount of their wealth could very easily be eroded by taxes. When you’re focused on tax efficiency, you can help families mitigate their tax liability and preserve more of their wealth for future generations. 
  • Maximizing wealth transfer: Effective tax planning enables high-net-worth families to transfer their wealth to heirs and beneficiaries in the most efficient manner. This one really boils down to beneficiaries receiving the maximum benefit.  
  • Preserving family legacy: Wealth transfers involve passing on financial assets AND family legacies, values, and aspirations. By implementing tax-efficient strategies, you can help protect and preserve the family’s legacy for future generations, ensuring their goals and values are upheld. 
  • Enhancing financial security: Really what we’re talking about here is mapping out strategies to reduce tax burdens — meaning families can allocate more resources towards investments, trusts, and other financial vehicles that can generate income and support the long-term financial well-being of the family. 
  • Mitigating disputes and conflicts: Estate planning and wealth transfers can sometimes lead to conflicts and disputes among family members. By incorporating tax efficiency into the overall planning process, advisors can help minimize potential disagreements and disputes that may arise due to unequal tax burdens or inefficient transfer structures. 
  • Complying with legal and regulatory requirements: Tax laws and regulations are complex and subject to frequent changes. Advisors who prioritize tax efficiency stay updated with the latest tax laws and compliance requirements, ensuring that wealth transfer strategies are aligned with legal frameworks and minimize the risk of potential penalties or legal complications. 

7. Leverage Best-of-Breed Technology 

Having the right tools and technologies in place is a game changer for everyone; the firm, advisors, your existing clients, and especially for the next generation. 

When considering best-of-breed technologies to assist with wealth transfer conversations and engaging the next generation, there are a few key things to keep in mind: 

  1. Consider technologies that make it easy for the family to access and manage critical information, data, and documents. 
  1. Consider platforms that offer mobile experiences (applications). This next generation isn’t just digital-first, they are mobile-first. 
  1. Consider how the experience you deliver is seamlessly integrated and connected – every bit of interaction counts. 

In fact, a survey and study published by Deloitte found that 51% of financial advisors are thinking about leaving for an organization with better tech tools.  

The alarming reality is that 50% of your staff and advisors could hand in their resignation tomorrow all because they do not have access to the best technology, tools, and resources. 

Technology matters. 

To your Back Office. 

To your Advisors. 

To your clients. 

And you better believe it matters to the next generation. 

Investing in best-of-breed solutions isn’t just a “technology” investment — it’s a people, culture, and overall strategic business investment for today and for the future. 

Key Consideration: Leveraging a Digital Vault as a Major Piece to Connect the Dots  

Having everything centralized in one place is not only a huge time-saving benefit for your clients and their next-gen, but it’s also a massive value to your firm and other trusted professionals. 

A well-structured digital vault can serve as a central repository for all of the important documents and information that clients and their families need to access in the event of a change in circumstances, such as the passing of a family member, a liquidity event for the family, or the retirement of an advisor. 

We’re really seeing how a secure digital document vault serves as the single source of truth for all data, information, and documents for the family while providing a secure and efficient way to engage and connect with other family members, centers of influence, and trusted advisors (lawyers, planners, accountants, etc). 

Imagine the time and money families, your client’s family, can save during the estate settlement process with a structured and secure digital vault, where traditionally, locating critical paperwork and having access to information has been one of the most time-consuming and costly exercises, leading to massive financial burdens. 

Importantly, a digital vault goes well beyond a simple document dumping ground of a valuable tool for your clients and their family members. The right digital vault can transform back-office and administrative efficiencies with automation and straight-through processing, as well as help firms overcome books and records challenges to meet regulation, including Rule 17a4 compliance.  

Final words 

Much can be said here, but we’ll keep it simple: Start the conversation with your clients (likely the parents of the heirs to the wealth) right now and don’t overthink it.  

Are you engaging in conversations about the generational transfer of wealth with your firm, with your peers and colleagues, with partners and providers, and importantly, with your clients? 

If you’re not, and if you’re waiting on the sideline… then it’s too late. You need to be having these conversations in real time, all the time.  

Hosting Family Meetings 101 - FutureVault

The 6-Step Blueprint to Hosting Multi-Generational Family Meetings

Family Meetings are one of the most effective, tried-and-true approaches that can play an incredibly important role in helping advisors understand family dynamics, create an intergenerational continuity plan, and importantly, stay relevant with and for the next generation.

When done right, Family Meetings encourage all necessary family members to participate in discussing all of the critical areas that go into such a plan; goals and values, transfer strategies, legacy and estate discussions, family assets and wealth, and more.

At the end of the day, this equips the family with a better understanding of everything and everything under the sun and empowers advisors with the necessary information they need to deliver real value.

In this article, we’ll highlight and unpack the 6 critical steps to running and facilitating effective Family Meetings.

Benefits of Facilitating Multi-Generational Family Meetings

Before we jump into the six steps of hosting Family Meetings, let’s quickly cover why your firm and your advisors should be hosting them in the first place. In particular, there are four benefits and outcomes that come to mind:

  • ➜ Family Meetings often result in the retention of family relationships and assets;
  • ➜ Family Meetings can lead to a better understanding of family dynamics and information;
  • ➜Family Meetings pave the way for building trust with the next generation;
  • ➜ Family Meetings can help increase the value of an advisor’s practice and set the stage for a successful succession plan

The 6-Step Blueprint to Hosting Multi-Generational Family Meetings

Advisors have a real opportunity to foster meaningful family discussions and ensure smooth wealth transitions by following the below 6 steps as a “blueprint” to hosting Family Meetings. 

It’s worthwhile to call out and mention, however, that your role as the Advisor when hosting Family Meetings is that of a Trusted Facilitator. The best way to approach them is that they are actually not your meetings, but rather you are there to facilitate the conversation and guide the family, especially when discussing the financial and wealth side.

You’re there to make everyone feel comfortable. To help everyone understand both the basic and complex financial topics. To encourage dialogue and participation that helps everyone in the family better understand the dynamics that will lead to a successful wealth transfer.  

For each of the six steps below, we’ll provide bulleted items so that you can easily take what’s here and use it as your own actionable blueprint.

Step 1: Preparation 

  • ➜ Set clear objectives and coordinate the initial logistics with your immediate clients
  • ➜ Understand your client’s goals, their preferences, and what they value
  • ➜ Work with your clients to identify key family members, including their next-gen and any expected heirs to the family wealth, to involve in these meetings
  • ➜ Share the agenda with the family and key family members required for attendance in advance of the initial meeting (and subsequent meetings)
  • ➜ And importantly, work with your client to become familiar with existing trusted advisors and third parties involved in dealing with the client (real estate agents, lawyers, accountants, bankers, etc.)

Step 2: Creating a safe environment for the family

  • ➜Establish a respectful and confidential atmosphere where the family is comfortable discussing financial and sensitive information
  • ➜ Encourage open dialogue and active listening
  • ➜ Ensure all family members feel valued and heard — this may involve ensuring everyone has a chance to table any questions or concerns by quite literally going around the room in order

Step 3: Establishing the family’s goals and values

  • ➜ Facilitate a discussion where one of the primary goals is to identify aspirations and values that are shared by family members
  • ➜ It’s important here to make sure that conversations are centered around wealth, legacy, and purpose
  • ➜ The ultimate goal is to foster unity and alignment among family members; this will involve making sure individual goals and values from all family members are discussed

Step 4: Educate and empower clients and the next generation

  • ➜ Provide access to educational resources (articles, videos, whitepapers) to as a way to help improve basic financial literacy and overall financial wellness
  • ➜ Focus on delivering education around financial topics that are relevant to the family’s current situation and their future goals as a family unit to reinforce the family vision
  • ➜ Empower younger family members to express their perspectives and more importantly, to take action
  • ➜ Cultivate their understanding of wealth management principles

Step 5: Develop the Wealth Transfer Plan

  • ➜ Collaborate with the family (and key family members) to address estate planning, philanthropy, legacy, and succession as critical components of the plan
  • ➜ Involve legal and tax advisors as foundational advisors for creating the plan
  • ➜ Document decisions, suggestions, and recommendations, and outline the next steps for the family as a unit and for individual family members for overall legacy and succession accountability

Step 6: Ongoing documentation and review  

  • ➜ Family Meetings and intergenerational planning are never a “one-and-done” ordeal. It’s important to establish ongoing communication with the family and to encourage key family members to follow through with their individual responsibilities
  • ➜ As situations and scenarios change, which they often do in life and with finances, your role will be the review and adapt the plan to the breadth of changing circumstances
  • ➜ Address concerns, celebrate milestones, and reinforce family values
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The Family’s Digital Vault is the backbone of it all

In today’s rapidly evolving landscape of wealth management, where families span multiple generations and geographies, the importance of effective communication and seamless access to critical information cannot be overstated.

This is precisely where and why a secure digital vault plays such an important role — and completely transforming the way wealth management professionals, firms, and family offices facilitate multi-generational family meetings.

Digital Vaults act as the centralized hub of family information, streamlining the flow of information and documentation, and ensuring critical information and documentation are accessible on-demand for key family members, and importantly, for key Trusted Advisors.

Traditionally, the organization and retrieval of sensitive financial documents and data for family meetings presented a significant logistical challenge. Advisors and firms had to sift through countless physical files, navigate complex folder structures, and manage a myriad of formats – all while ensuring security, confidentiality, and of course, compliance. This often led to inefficiencies, delays, and potential information gaps.

Fortunately, secure digital document vaults like the Personal Life Management Vault™ address and overcome the many challenges by making it easy, secure, and efficient to upload, manage, access, and share a range of documents, including financial statements, legal agreements, estate plans, tax records, investment portfolios, business documentation, and more.

With families dispersed across different regions, continents, and timeframes, the vault enables advisors, family members, and additional third parties (accountants, lawyers, agents, etc.) to connect, collaborate, and access information in real-time.

Preparing for multi-generational family meetings becomes a streamlined process, as advisors can readily compile and share relevant documents, presentations, and reports all within the Vault. This ensures that every family member is well-prepared and informed, fostering more productive discussions and strategic decision-making during the meeting itself.

Frequently Asked Questions

Question 1: Why should my firm and advisors prioritize hosting Family Meetings?

Hosting Family Meetings offers several significant benefits, including the retention of family relationships and assets, a deeper understanding of family dynamics and information, building trust with the next generation, and increasing the value of your advisor’s practice while setting the stage for a successful succession plan.

Question 2: What role does the advisor play in facilitating Family Meetings?

The advisor’s role in Family Meetings is that of a Trusted Facilitator. While you guide and facilitate the conversation, the meetings belong to the family. You help create a comfortable environment, ensure everyone understands financial topics, encourage dialogue, and assist the family in understanding dynamics crucial for a successful wealth transfer.

Question 3: How do I prepare for hosting effective Family Meetings?

To prepare for successful Family Meetings, it’s essential to set clear objectives, coordinate logistics, understand your clients’ goals and values, involve key family members, share the agenda in advance, and familiarize yourself with existing trusted advisors and third parties involved in dealing with the client.

Question 4: What is the significance of a secure digital vault in multi-generational family meetings?

A secure digital vault serves as a centralized hub for family information, streamlining the organization and retrieval of critical documents. It facilitates easy, secure access to financial statements, legal agreements, estate plans, tax records, and more, enabling advisors, family members, and third parties to connect, collaborate, and access information in real-time.

Question 5: How do Family Meetings contribute to intergenerational wealth transfer?

Family Meetings play a vital role in intergenerational wealth transfer by establishing an open dialogue where family members can discuss goals, values, and legacy. They educate and empower the next generation, address estate planning and succession, and encourage ongoing communication and adaptation as circumstances change, fostering unity and alignment among family members.

Succession Planning for Financial Advisors - FutureVault

Succession Planning for Financial Advisors: The Top 5 Most Important Success Planning Considerations

With M&A activity continuing to blossom and the average age of financial advisors being well over the age of 50, succession planning for financial advisors is becoming an increasingly important subject and area of focus.

Succession planning is a critical aspect of any and every financial advisory practice. Advisor succession planning involves carefully establishing a strategy to ensure the seamless transfer of clients, assets, and responsibilities when a financial advisor retires or leaves and exits the business.

Advisor succession planning is a strategic process that enables financial advisors to ensure a smooth transition of their business to the next generation of advisors. It involves identifying and grooming potential successors, addressing client concerns, and ensuring regulatory compliance throughout the transition.

By proactively addressing succession planning considerations, financial advisors can protect their clients’ interests, maintain business continuity, and preserve their legacy. In this article, we will discuss the top five most important considerations when it comes to succession planning for financial advisors, along with the essential role of a Digital Vault in organizing and structuring advisor business and client data, information, and documents.

Table of Contents

  1. Importance of Succession Planning
  2. Identifying Potential Successors
  3. Transitioning Client Relationships
  4. Ensuring Regulatory Compliance
  5. The Role of a Digital Vault in Succession Planning
  6. Communicating the Succession Plan
  7. FAQs
  8. Conclusion

The Importance of Succession Planning for Financial Advisors

Succession planning is incredibly important for financial advisors for a variety of reasons, including the following:

  • Business Continuity: A well-executed succession plan ensures that clients’ financial needs are met without interruption, maintaining the trust and relationships established by the retiring advisor. Importantly, communication with clients (and family members) must also be taken into account.
  • Client Retention: When a financial advisor sells or exits the business, clients may feel uncertain and seek alternatives. A well-defined and well-thought-out succession plan helps retain clients by instilling confidence in the firm’s ability to deliver consistent service and value.
  • Value Preservation: A successful succession plan preserves the value of the financial advisory practice. By grooming and transitioning successors, the retiring advisor can maximize the value of their business.
  • Regulatory Compliance: Succession planning ensures compliance with industry regulations, such as notifying clients about the transition and transferring assets appropriately.

Consideration 1: Identifying Potential Successors

Identifying potential successors for the business is, without a doubt, one of the most critical steps—or rather considerations— in the succession planning process. Consider the following factors:

  • Skills and Expertise: Look for individuals within the firm who possess the necessary skills, experience, and knowledge to effectively serve clients.
  • Cultural Fit: Evaluate potential successors based on their alignment with the firm’s values, vision, and client-centric approach.
  • Leadership Abilities: Assess the leadership qualities of potential successors, as they will be responsible for guiding the firm and maintaining client relationships.
  • Mentoring and Training: Provide mentorship and training opportunities to develop the skills of potential successors and ensure a smooth transition.

Consideration 2: Transitioning Client Relationships

Your clients are everything. To you, the firm, and your staff—they’re the reason why you entered the business in the first place. It should go without saying that smoothly transitioning client relationships is essential for a successful succession plan. Consider the following steps:

  • Introducing the Successor: Introduce the successor to clients well in advance to establish rapport and trust. Encourage joint meetings and gradually transition responsibilities.
  • Maintaining Communication: Ensure ongoing communication with clients throughout the transition process. Address any concerns or questions promptly to maintain transparency and trust.
  • Updating Client Documentation: Update client account documentation to reflect the change in advisor. Provide clear instructions regarding any required paperwork or account transfers.

Consideration 3: Ensuring Regulatory Compliance

Adhering to regulatory requirements is table stakes when implementing a succession plan. Consider the following:

  • Notification to Clients: Notify clients in writing about the impending succession plan, providing information on the new advisor and the transition process.
  • License and Registration Transfer: Ensure the proper transfer of licenses and registrations for the successor advisor to avoid any legal or compliance issues.
  • Compliance Review: Conduct a comprehensive review of the successor advisor’s compliance record to ensure they meet all regulatory standards and have a clean disciplinary history.
  • Client File Management: A large part of compliance requirements ensures that the proper data, information, and documentation is maintained, accessible, and meets books and records requirements, including document retention.

    *This is where having a secure and structured digital vault can proactively support transitioning advisors and overall information governance.

Consideration 4: The Role of a Digital Vault in Succession Planning

Digital Vaults have increasingly become an indispensable tool for institutions and financial advisors for several process-driven use cases, and importantly, during succession planning.

A Digital Vault is a secure and centralized platform that allows advisors to organize and structure their business documents while also better structuring and organizing client files and critical documentation needed for operational and compliance purposes.

Here are the key benefits of using a Digital Vault in the succession planning process:

  • Document Organization: A Digital Vault provides a structured environment to store and manage business and client documents efficiently. Advisors can categorize and label appropriate business documents while also creating Vaults with defined folder structures, labels, and entities for their clients to easily (and efficiently) manage everything at scale.
  • Secure Storage: Security is paramount when it comes to storing sensitive client information and business documents. A Digital Vault offers robust security features, including encryption, user access controls, and regular backups, ensuring the confidentiality and integrity of the stored data.
  • Collaboration and Sharing: During the succession planning process, effective collaboration is essential between the retiring advisor, potential successors, and other stakeholders. A Digital Vault facilitates seamless collaboration by allowing multiple users to store, access, and share documents securely, eliminating the need for physical paperwork and eliminating back-and-forth processes.
  • Compliance Management: Regulatory compliance is a critical aspect of succession planning. A Digital Vault provides features to help financial advisors maintain compliance, such as data residency, data redundancy, digital audit trails, and document retention policies. These features ensure that the necessary documentation is up-to-date, easily accessible, and retained as per regulatory requirements.
  • Efficiency and Productivity: With a Digital Vault, financial advisors can streamline their document management processes, saving time and improving overall productivity. The ability to quickly search for and retrieve documents, automate document workflows, and eliminate manual paperwork allows advisors to focus more on client relationships and the succession planning process itself.
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Consideration 5: Communicating the Succession Plan

Clear and effective communication is key to a successful succession plan and overall transition when handing over the keys to the business. Consider the following strategies:

  • Internal Communication: Communicate the succession plan to all staff members, advisors, and board members to ensure everyone is aligned and aware of their roles and responsibilities during the transition.
  • Client Communication: Develop a communication strategy to inform clients about the succession plan, emphasizing the continuity of service and the qualifications of the successor advisor. It’s important to understand that clients may feel uneasy during any transition and will likely have many questions; be patient and understanding.
  • Marketing and Branding: Update marketing materials, including the firm’s website, collateral and social media handles, to reflect the changes in leadership and reinforce the continuity of the advisory practice.


What is a Digital Vault?

A Digital Vault is a secure and centralized platform that allows financial advisors to organize and structure their business documents while also better structuring and organizing client files and critical documentation needed for operational and compliance purposes.

How does a Digital Vault benefit succession planning for financial advisors?

A Digital Vault enhances succession planning by providing document organization, secure storage, collaboration and sharing capabilities, compliance management features, and improved efficiency and productivity.

What security features does a Digital Vaulttypically offer?

A Digital Vault offers robust security features such as encryption, user access controls, regular backups, and secure authentication protocols to ensure the confidentiality and integrity of stored data.

How does a Digital Vault help with compliance management?

A Digital Vault assists with compliance management by providing features such as document versioning, audit trails, and document retention policies, ensuring that advisors can meet regulatory requirements and easily access necessary documentation.

Can a Digital Vault be accessed remotely?

Yes, a Digital Vault can be accessed remotely, allowing financial advisors and their team members to securely access and manage documents from anywhere, anytime on laptop, tablet, and mobile devices.

In conclusion, succession planning is a crucial process for financial advisors, and a Digital Vault plays a vital role in organizing and structuring business and client documents. By leveraging the benefits of a Digital Vault, financial advisors can enhance their succession planning efforts, streamline document management, ensure regulatory compliance, and improve overall efficiency. By combining strategic planning, effective communication, and the right technology solutions like a Digital Vault solution, financial advisors can successfully navigate the succession planning journey and secure the future of their practice.

Intergenerational Continuity Plan Checklist of Documents - FutureVault

Intergenerational Continuity Planning Checklist: What Documents and Information do you Need?

Having a structured information management plan in place and providing family members with access to critical information and documents is a key component of any intergenerational continuity plan and succession plan. This will outline some of the critical documents required when creating and maintaining an intergenerational continuity plan.

An intergenerational continuity plan is a comprehensive strategy designed to ensure the seamless transfer of wealth, values, and legacy from one generation to the next. It involves documenting and organizing important information, instructions, and legal documents to facilitate the smooth transition of assets, responsibilities, and decision-making across the family and across generations. 

Accurate information and documentation are crucial in an intergenerational continuity plan for several reasons:

  1. Clarity of Intentions: Accurate documentation helps clearly express the client’s wishes and intentions regarding the distribution of assets, management of investments, philanthropic goals, and any other specific instructions. It reduces the potential for misinterpretation or disputes among family members.
  2. Efficient Execution: Having accurate and up-to-date information ensures that the plan can be executed efficiently. It provides a roadmap for advisors, trustees, and family members to follow, enabling them to take appropriate actions and make informed decisions without confusion or delays.
  3. Compliance and Legal Requirements: Proper documentation ensures compliance with legal and regulatory obligations. It helps address legal requirements related to estate planning, tax filings, asset transfers, and other relevant matters, minimizing the risk of legal complications or challenges.
  4. Asset Protection: Accurate information and documentation help protect the client’s assets and wealth. It ensures that appropriate measures are in place to safeguard assets from potential risks, such as creditors, lawsuits, or other unforeseen circumstances.
  5. Continuity of Financial Affairs: Accurate documentation enables a smooth transition of financial affairs from one generation to the next. It allows designated individuals or advisors to understand the client’s financial landscape, obligations, and investment strategies, enabling them to continue managing the wealth effectively.
  6. Family Harmony and Communication: An intergenerational continuity plan promotes open and transparent communication among family members. Accurate documentation facilitates discussions about wealth transfer, expectations, and responsibilities, helping to foster family harmony and minimize potential conflicts.
  7. Preservation of Legacy: Accurate information and documentation play a vital role in preserving the client’s legacy. It allows future generations to understand the values, traditions, and stories associated with the family’s wealth, ensuring that the legacy is carried forward as intended.
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A Guideline to Creating a Checklist of Documents

Below is a guideline to help firms and advisors understand the types of information and documents required for creating and maintaining an intergenerational continuity plan. It’s important to note that this is not prescriptive, and the type of information required will depend on your clients and the level of complexity around their personal, business, and financial lives.  

Will and Estate Planning Documents

  • ✔ Last Will and Testament: A legal document that outlines how assets will be distributed upon the client’s death. 
  • ✔ Living Will or Advance Healthcare Directive: Specifies the client’s healthcare wishes in case of incapacitation. 
  • ✔ Durable Power of Attorney: Authorizes a designated individual to manage financial and legal affairs on behalf of the client if they become unable to do so. 

Trust Documents

  • ✔ Revocable Living Trust: A legal arrangement that allows the client to transfer assets into a trust, providing flexibility, control, and privacy in estate planning. 
  • ✔ Irrevocable Trusts: Various types of trusts designed to achieve specific estate planning goals, such as minimizing estate taxes, protecting assets, or providing for charitable giving. 

Beneficiary Designations

  • ✔ Retirement Accounts: Ensure proper beneficiary designations are in place for IRAs, 401(k)s, and other retirement plans. 
  • ✔ Life Insurance Policies: Review and update beneficiary designations on life insurance policies to align with the client’s wishes. 

Family Governance Documents

  • ✔ Family Constitution or Family Mission Statement: A document outlining the family’s values, goals, and principles for managing wealth and fostering family unity. 
  • ✔ Family Trusts or Family Limited Partnerships: Include any structures established to govern family wealth, transfer assets, or facilitate communication among family members. 

Letter of Instruction (Letter of Intent)

  • Often included in the Family Governance Documents, this is a non-legally binding document that provides guidance to heirs or trustees on the client’s wishes regarding personal matters, wishes and intentions for the future management of their wealth and family legacy, funeral arrangements, and special bequests. 

Philanthropic Goals and Charitable Giving Plans

  • If the client has philanthropic goals or a charitable giving plan, document these intentions and include any relevant agreements or foundations established. 

Prenuptial or Postnuptial Agreements

  • If the client has a prenuptial or postnuptial agreement, ensure it is included in the continuity plan to address any potential impact on wealth distribution. 

Business Succession Plan

  • If the client owns a business, a detailed plan outlining the transfer or sale of the business to the next generation or a designated successor. 

Inventory of Assets

A comprehensive list of the client’s assets, including investment accounts, real estate holdings, business interests, and personal property. 

Financial Statements and Account Information 

  • ✔ Bank Statements: Provide statements for all bank accounts, including checking, savings, and money market accounts. 
  • ✔ Investment Account Statements: Include statements for brokerage accounts, mutual funds, ETFs, and other investment holdings. 
  • ✔ Real Estate Documents: Include property deeds, mortgage documents, and lease agreements for all owned real estate properties. 

Personal Property Inventory 

  • Create an inventory of valuable personal property such as artwork, jewelry, collectibles, and heirlooms, along with instructions on their distribution or management. 

Digital Assets and Passwords 

  • Instructions on how to access and manage the client’s online accounts, including email, social media, banking, and investment platforms. 

Debt and Liability Information

  • A record of outstanding debts, loans, mortgages, and other liabilities that need to be settled upon the client’s death. 

Insurance Policies

  • ✔ Life Insurance Policies: Provide copies of all life insurance policies, including details on coverage, beneficiaries, and contact information for the insurance company. 
  • ✔ Property and Casualty Insurance Policies: Include homeowners’ insurance, auto insurance, and any other property and casualty insurance policies. 

Tax Returns and Records

  • ✔ Personal Income Tax Returns: Maintain copies of the client’s filed tax returns for the past several years. 
  • ✔ Business Tax Returns: If the client owns a business, include corporate tax returns and related documentation. 
  • ✔ Gift and Estate Tax Returns: Keep records of any gift tax returns filed or estate tax returns related to prior generations. 

Education and Medical Records

  • ✔ Educational Records: Include transcripts, diplomas, and documentation of any education funds or trusts established for children or grandchildren. 
  • ✔ Medical Records: Maintain copies of medical records, health insurance policies, and information on healthcare providers. 

Special Considerations

  • ✔ Special Needs Planning: If a family member has special needs, include documentation and plans for their care and financial support. 
  • ✔ Family Business Agreements: If the family owns a business, include shareholder agreements, operating agreements, and any buy-sell agreements. 

Contact List

  • A document listing key contacts, including attorneys, accountants, financial advisors, insurance agents, and any other professionals involved in the client’s financial affairs. 

Succession Plan for Advisors

  • If the advisor plays a key role in managing the client’s wealth, a documented succession plan outlining who will take over the advisory relationship in the event of the advisor’s retirement, incapacity, or death. 

Regularly Reviewing and Updating the Plan

It’s important to regularly revisit and update your clients’ intergenerational continuity plans to memorialize and document any and all significant changes.

Consider reviewing and updating plans every 6 to 12 months, during routine Family Meetings, or on an as-needed basis whenever significant events take place that have an impact on the family, good or bad. These include liquidity events and the sale of a business; significant loss of assets; retirement; and death, to name a few.

For Ultra High Net Worth (UHNW) families, consider reviewing, revisiting, and updating the family’s intergenerational continuity plan more frequently due to complex financial, business, and legal structuring.

The Backbone of an Intergenerational Plan: A Digital Vault

Having a structured information management plan in place and providing family members with access to this information is a key component of any continuity and succession plan. This will help to ensure a smooth transition of assets and provide peace of mind for clients and their families.

One of the most effective ways firms and advisors can execute an intergenerational continuity plan is by implementing a secure digital vault for family legacy information and documents.

A well-structured digital vault can serve as a central repository for all of the important documents and information that clients and their families need to access in the event of a change in circumstances, such as the passing of a family member or the retirement of an advisor.

When evaluating a Digital Vault solution for intergenerational planning, consider the below as a subset of critical features:

  • Anytime, anywhere access via laptop, tablet, and/or mobile devices
  • Institutional-grade security and data privacy (encryption in-transit and at-rest)
  • Secure file-sharing permissions for Trusted Advisors and Contacts
  • Client and family member (next-gen) access and permissions
  • Ability to label and tag documents associated to various personal, financial, and legal entities (Trusts, Properties, Individuals, etc)

*This is not a comprehensive list of features to consider

Intergenerational Continuity Plan - How FutureVault Protects Family Legacy

Intergenerational Continuity Plan: Leveraging a Digital Vault to Protect & Preserve Family Relationships

More than ever, institutions and advisors need to establish an intergenerational continuity plan to retain assets and family relationships.

In today’s rapidly changing economic and demographic landscape, it is essential for advisors to develop an intergenerational continuity plan that not only helps to retain assets, but also facilitates the transfer of knowledge, expertise, and critical information to family members.

What is an intergenerational continuity plan?

An intergenerational continuity plan is a comprehensive family-focused financial plan that essentially outlines how a family’s wealth will be managed and importantly, transferred to future generations. The plan is designed to ensure that the family’s values and legacy are preserved and passed down through generations.

The primary purpose of an intergenerational continuity plan is to provide a roadmap for managing and transferring wealth in a way that aligns with the family’s goals and objectives; much like a financial plan is to align individual (or household) financial goals and objectives.

An intergenerational continuity plan typically includes strategies for managing and protecting assets, minimizing taxes, and ensuring that the wealth is distributed in a fair and equitable manner. This plan may also include provisions for charitable giving, education funding, and other philanthropic activities. It may involve the use of trusts, family partnerships, and other legal structures to facilitate the transfer of assets from one generation to the next.

Overall, an intergenerational continuity plan is a proactive approach to managing and preserving family wealth over the long term. It helps to ensure that the family’s legacy is passed down through the generations and that future generations (and heirs to the wealth) are able to build on the successes of their predecessors.

Keys to success when creating an intergenerational continuity plan.

Financial advisors looking to establish and maintain an intergenerational continuity plan for the families they work with can take action by considering the below “steps” or rather critical components to get started.

(1) Understand the clients’ goals and objectives

Financial advisors need to have a clear understanding of their clients’ goals and objectives for their wealth. They should understand the clients’ values and beliefs regarding wealth, and how they want to pass on their wealth to future generations.

(2) Involve the family

It’s important, and in fact necessary, for advisors to involve the family in the planning process. They should encourage open communication and involve all family members in the decision-making process. This helps to ensure that everyone is on the same page and understands the plan.

Hosting semi-annual or annual family meetings and playing the role of ‘facilitator’ is a tried and true way to encourage deeper and more meaningful conversations across the household to better align goals for the future.

(3) Develop a plan

Once enough information regarding goals, objectives, nuances with family details and structure, etc., along with a better understanding of family dynamics have been discussed and identified, advisors should have enough information to begin developing a comprehensive plan that includes strategies for transferring wealth to future generations. The plan should be flexible and adaptable to changing circumstances.

(4) Educate the next generation

Importantly, advisors should always be looking for ways to help educate the next generation about financial management, wealth transfer, and family values, especially when it involves a large amount of wealth being passed down through generations.

This includes teaching the basics about budgeting, saving, investing, tax strategies, and charitable giving. The more your firm and advisors educate and inform, the more trust you will establish with the next generation.

(5) Monitor and adjust the plan

After developing the initial plan, and just like any type of financial plan for clients, your work is never done. Maintaining the family’s intergenerational continuity plan requires ongoing maintenance, regular meetings, and an ongoing understanding of changing family dynamics.

All of this will ensure that the plan remains relevant and effective in achieving your clients’ goals and objectives.

Overall, creating an intergenerational continuity plan requires a collaborative effort between advisors, clients, and family members, including the next generation. By following these steps, financial advisors can help their clients ensure that their wealth is preserved and passed on to future generations in accordance with their wishes.

Information (and having access to it) is fundamental to every intergenerational continuity plan

Having a structured information management plan in place and providing family members with access to this information is one of the biggest components of any continuity and succession plan. A well-structured way to manage critical information and documents will help to ensure a smooth transition of assets and provide peace of mind for clients and their families.

One of the most effective (and efficient) ways firms and advisors can execute (and maintain) an intergenerational continuity plan is by implementing a secure digital vault for family legacy information and documents.

A well-structured digital vault can serve as a central repository for all of the important documents and information that clients and their families need to access in the event of a change in circumstances, such as the passing of a family member or the retirement of an advisor.

To create a successful continuity plan using this approach, institutions and advisors should ensure that the data and document vault being used is accessible to all relevant parties, including family members, attorneys, accountants, wealth advisors, and other trusted advisors, and that the documents are organized in a clear and easy-to-navigate manner. Importantly, it’s critical to ensure that all relevant parties have access to the appropriate areas, folders, and documentation they need to have access to.

It should go without saying that security and data privacy is table stakes. Look for a digital vault solution (FutureVault) that comes equipped with advanced encryption in-transit and at-rest, multi-factor authentication, secure access permissioning, encrypted file-sharing capabilities, regular backups, along with meeting your data residency and document retention requirements, and so forth.

And importantly, being able to access, share, and deliver critical information anytime, anywhere is critical in today’s fast-paced, digital, and remote-enabled world. Your clients (and their family members) will benefit tremendously by being able to access critical information and documents on their desktop, tablet, or mobile devices, 24/7, wherever they are in the world.

Preparing for the next generation of clients

The fact of the matter is that most financial advisors are not nearly as prepared as they need to be and that the majority of heirs to the wealth will be looking to make moves, on their own terms.

With more than 70% of heirs are likely to fire or change financial advisors after inheriting their parents’ wealth (according to Cerulli Associates), this transfer of wealth has massive implications on how firms and wealth advisors need to be operating their businesses and servicing households to better secure any chance they might have of participating in wealth transfer conversations with families, and of course, in retaining assets and relationships.

An intergenerational continuity plan is absolutely critical for firms and advisors looking to build trust and confidence with the next generation, and leveraging a best-of-breed digital document vault can ensure your firm and your advisors and putting your best foot forward to engage with current and future generations.

The Great Wealth Transfer - How to Retain Family Assets During the Great Wealth Transfer - FutureVault

The Great Wealth Transfer: How to Retain Family Assets and Relationships During the Great Wealth Transfer

The current demographic shift that is taking place in the United States, Canada, and other developed countries is resulting in a massive transfer of wealth from older generations to younger ones.

Over the next several decades, trillions of dollars will be passed down from baby boomers to their children and grandchildren. This transfer of wealth, known as the “great wealth transfer,” presents both challenges and opportunities for financial advisors and institutions.

One of the main challenges that financial advisors, firms, and institutions will face as a result of the great wealth transfer is the ability to retain family assets.

As older generations pass away, their assets will be transferred to the next generation, who may choose to take their business elsewhere if they feel that they are not receiving exceptional value from their current advisor or institution.

In fact, according to the latest Cerulli Edge—U.S. Advisor Edition, more than 70% of heirs are likely to fire or change financial advisors after inheriting their parents’ wealth. This makes it more important than ever for advisors to establish an intergenerational continuity plan to retain assets.

To retain assets during the great wealth transfer, financial advisors and institutions must focus on delivering exceptional value to family members and soon-to-be heirs. This can be achieved in a number of ways, including:

1) Providing education and training to family members and soon-to-be heirs:

Financial advisors and institutions can help to ensure a smooth transition of assets by providing education and training to family members and soon-to-be heirs on topics such as investment management, tax planning, as well as legacy and estate planning.

2) Implementing a secure digital document vault:

A secure digital document vault can serve as a central repository for all of the important documents and information that clients and their families need to access in the event of a change in circumstances, such as the passing of a family member or the retirement of an advisor.

A digital document vault ultimately serves as the single source of truth for all data, information, and documents for the family, while providing a secure and efficient way to engage and connect with other family members, centers of influence, and trusted advisors.

3) Having designated successors internally:

Advisors may want to consider having designated successors internally to take over the accounts in case of an event that would result in the primary advisor’s retirement, sudden departure, or unexpected death.

4) Offering a tailored service that fits the needs of the next generation:

Older generations may have different needs, preferences, and values than younger ones. Advisors should make sure they understand the needs and preferences of the next generation and tailor their services as well as the way they are communicating with current and future clients accordingly.

5) Helping clients to structure transfers of wealth as tax-efficiently as possible:

U.S. households are expected to transfer close to $70 trillion to their heirs and charities by 2042. Baby Boomers are expected to pass on upward of 73% of this amount (a total of $51 trillion). Tax efficiency will become increasingly important, given most of the wealth is held by older, high-net-worth (HNW) investors (those with greater than $5 million in investable assets) and will likely be subject to more expansive taxes in the coming decade.

By providing clients with tax-efficient strategies and solutions, financial advisors and institutions can help to ensure that their clients’ wealth is passed down to the next generation in the most tax-efficient manner possible.

The above numbers and statistics referenced were taken by the report from Cerulli Associates.

The 6 Most Common Books and Records Compliance Challenges - FutureVault

The 6 Most Common Books and Records Compliance Challenges

Broker-Dealers and Registered Investment Advisors (RIAs), along with other financial services and wealth management organizations, face several books and records compliance challenges that impede business efficiency and that can lead to detrimental consequences on their businesses — but they shouldn’t have to.

Here at FutureVault, our team spends a fair of time in deep discussions with Broker-Dealers, RIAs, Financial Institutions, and Family Offices who are looking to adopt and implement our secure digital document vault solutions for a variety of reasons that bring value to many different areas of their business.

One of those reasons—and a very good one at that—is books and records compliance. Specifically, with respect to helping firms and their advisors confidently meet and demonstrate books and records and document management compliance of regulatory bodies including FINRA, the SEC, IIROC, the OSC, and more.

With several technical books and records compliance requirements, along with ongoing updates and amendments to existing rules provisioned by the likes of FINRA and the SEC, come many different challenges and concerns along the way.

Thankfully, as a result of where we “sit” in the industry and the relationship(s) we have with industry experts, we can confidently say that we have our finger on the pulse with respect to understanding the challenges firms are up against as it relates to managing and demonstrating books and records compliance.

Note: While this article mentions and references FINRA and SEC books and records compliance, the challenges (and solutions) are applicable regardless of regulatory authority.

6 Common Books and Records Compiance Challenges

From what we continue to see, hear, and witness quite frequently through conversation and direct experience with the firms we work closely with, below are six of the most common challenges and concerns when it comes to books and records and document management compliance.

1) Ensuring proper retention for all record types

Regulation outlined in SEC 17a-4, sections a-e, specify the requirements for preserving records. Organizations must ensure that they have the capacity to retain all relevant documentation and records for a minimum of at least six (6) years, adhering to these rules. Wealth management and financial services firms must capture and archive all transaction-related data, including structured and unstructured records such as invoices, contracts, statements, and so forth.

According to Rule 17a-4, firms must keep records of transactions on indelible media, and index them, making them immediately accessible for two (2) years, followed by a minimum of six years of accessibility. It’s also important to note that duplicate versions of critical records must also be kept for the same duration.

Network drives, physical paper, and other legacy-based systems pose significant challenges, risks, and even financial burdens that make it difficult for firms and their staff to ensure retention periods are being met and evidenced.

2) Storing records in a non-rewriteable, non-erasable format (W.O.R.M. requirement)

In accordance with SEC Rule 17a-4(f), electronically stored content must be preserved using a non-rewriteable and non-erasable format that requires W.O.R.M. storage.

W.O.R.M. (or WORM) stands for Write Once Read Many, indicating that any information saved in WORM-compliant storage cannot be modified, tampered with, or deleted. Compliance with SEC 17a-4 mandates this standard under FINRA regulations to guarantee that all records related to business operations remain unalterable.

On October 12, 2022, the commission passed a proposed amendment that provides a modern alternative option for storing and handling books and records on WORM or immutable media. The alternative involves saving regulated records with an audit-trail capability.

This amendment to Rule 17a-4(f) requires a broker-dealer who employs an archive or electronic records management system to ensure that the system satisfies either the audit-trail requirement or the WORM requirement.

If the audit-trail option is chosen, the broker-dealer must utilize a records management system that preserves regulated records in a way that allows for the recreation of the original regulated record in case of corruption, modification, or deletion.

3. Scattered and disparate systems being used to manage and archive documents

The continued and prevalent use of disparate systems poses several challenges in and of itself, including an inability to effectively discover and retrieve records or even at all.

Compliance with Section 17a-4(j) requires the capabilities of firms to discover and retrieve records. Nonetheless, records may become misplaced among various systems because not all content is identifiable or retrievable without appropriate tools. The inability to search and access critical documentation and records poses a significant risk of non-compliance and leads to poor operational processes.

Physical paper records and documents pose another risk; appropriately storing and retaining physical office records for the required two-year period as specified in SEC 17a-4(l).

Here’s what we see as one of the biggest concerns, and quite frankly, far more often than we should; different (multiple) recordkeeping and document systems being used for the different types of documents at the different levels of an organization.

What exactly do we mean by this?

Oftentimes, one platform or system might be used to manage and access head office, enterprise, and compliance documentation. Another system might be in place for advisors to manage their business documents and to receive documents from the head office or their Broker-Dealer. And a third or even fourth platform might exist to support the delivery, access, retrieval, and management of critical client documentation such as tax documents, estate plans, and account statements.

This leads to significant issues in the long term, making it incredibly difficult to stay compliant or demonstrate compliance, let alone the many red flags from an operational, experience, and workflow perspective.

4. Inability to efficiently evidence documents and conduct internal/external audits

The above challenges that we’ve already discussed can make it next to impossible to efficiently evidence documentation, especially on-demand and within appropriate timelines.

When you combine that with poor internal and external audit practices or rather an ability to sufficiently provide materials and required documentation to auditors in a timely manner, then you’re only setting yourself up for a poor audit review and running the risk of auditors flagging your business, or worse, delivering fines.

To avoid fines, loss of certification, loss of credibility, and damaging press coverage, organizations must be able to conduct periodic internal and external audits with FINRA to prove that they are SEC-compliant.

The timeliness of an audit, and the ability to deliver evidenced documentation on demand, in one centralized location, with no issues whatsoever, signals to auditors and authorities that your firm has polished processes and importantly, demonstrates compliance.

The opposite is also true; slow responses and slower-than-expected delivery of critical evidence (documents) often signal to auditors that something might be going on behind the scenes and can be seen as a risk to regulatory authorities.

5. Data and document ownership and access control

Really what we are referring to here is that the custodian partner (oftentimes multiple custodian partners) cannot — or rather should not — be the owner where client documents reside.

Broker-Dealers, RIAs, and every advisor is ultimately responsible for these documents and must maintain those records confidently.

We have seen, in far too many circumstances that it’s somewhat scary, firms being under the impression that client data and documents are safe in the hands of the custodian. While there is some truth to this, the fact of the matter is that Broker-Dealers, RIAs, and every advisor is ultimately responsible for these documents and must maintain those records confidently.

Not only is having ownership over documents on a platform of your own a good habit, practice, and experience for your clients, it falls in line with the requirements of regulatory authorities.

For firms that have multi-custodial relationships (partnerships), having complete control and flexibility over client documentation (statements, account opening documents, tax documents, etc) will provide you with a ton of confidence and support from an operational lens.

6. Use of non-secure and non-compliant document exchange tools

Last but certainly not least on our list of challenges and concerns, we continue to witness and see widespread use of non-secure and non-compliant file-sharing tools and practices still being used almost daily by firms, their advisors, and key staff members.

Surprisingly, or maybe not so much, email continues to be a massive culprit, likely due to familiarity, that puts client information, data, and documents at risk when shared and exchanged using this method.

We recently shared a “horror story” and a real-life anecdote of a financial advisor that shared sensitive financial and personal information over email to their client which ended up being delivered to that advisor’s entire client list. Ouch! You can read the story here if interested.

Overcoming Books and Records Challenges to Meet SEC 17a-4 Compliance with FutureVault

The challenges and concerns mentioned above are no joke. They can land firms in boiling hot water and can lead to:

  • Massive fines
  • Mistrust from existing clients
  • Reputational risk in the industry
  • Suspension or loss of licenses

Thankfully, solutions like FutureVault exist to help organizations overcome these challenges to meet and demonstrate compliance with confidence, along with providing massive value by improving operational efficiency and by delivering an enhanced digital client experience.

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Let’s take a look at precisely how firms can overcome these challenges with FutureVault.

1. FutureVault can automate the retention and disposition of all record types to ensure SEC 17a-4 compliance

FutureVault’s cloud-based secure digital document vault makes it easy for any and all types of firms to confidently meet and satisfy the different retention requirements through automated configuration. Being able to back up and retain all your information ensures not only SEC 17a-4 compliance, but overall security while giving you a full picture of your enterprise, advisor, and client data and documents as a whole.

This includes vendor-related documentation, advisor documents and statements (commission reports), email-based communications, client statements and quarterly performance reports, tax documents, account opening documentation, emails, any structured data (ex: spreadsheets) or unstructured data (ex: scanned pdfs, images, text-based docs), and so forth.

FutureVault leverages Optical Character Recognition (OCR) technology to allow for the effective filtering, searching, and retrieval of critical data, information, and documents. Even scanned (via the mobile application) or uploaded images are processed OCR for text extraction, allowing for the complete search of text within image-based files.

FutureVault’s DR4 framework enables firms and advisors to exceed security standards and regulatory requirements. This framework is all about preserving the security and integrity of confidential information and documents:

Document retention: FutureVault maintains historic copies of your data and your client data to follow your own compliance framework and the requirements set out by the authorities that regulate your organization.

Data residency: With FutureVault, your data is encrypted and backed up in different regions, ensuring your data residency requirements are met.

Data redundancy: In addition to constant backups, documents are replicated and converted into PDFs once ingested into the platform, with the original document being maintained. 

Disaster recovery: Our backup and disaster recovery plan meets stringent requirements to prevent data loss and interruption.

Read more about FutureVault’s platform security and compliance overview.

2. WORM Storage to prevent alteration or deletion of documents

Making the content immutable after the initial write is critical to prevent any tampering or deletion so it is truly locked in and compliant with SEC 17a-4. In FutureVault, every and any document that makes its way into the Vault is meant to be delivered in its final form, and as a result, documents delivered to clients (as an example) by advisors or administrative users cannot be deleted, removed, or altered in any way.

Documents that are automatically ingested into the Vault via integration and APIs from third parties such as custodians, portfolio management solutions, and so forth, are delivered in an unalterable format to ensure that they too cannot be deleted, removed, or tampered with once delivered in order to meet WORM storage requirements.

3. Audit trail functionality on every document

Every single document that exists within the FutureVault platform contains an associated audit trail that tracks and records all activity related to each document, in real time. This audit trail cannot be edited, removed, or tampered with by any user on the platform.

Each audit trail provides data that includes:

  • the user name (and ID) who performed the action;
  • the type of action performed (upload, download, share, view, etc.,); and
  • a timestamp of when the activity took place

Audit trails make it easy to conduct internal and external audits by providing evidence of the activity associated with documentation and data being reviewed and that is necessary to demonstrate compliance with SEC17a-4 regulation.

Not only do audit trails demonstrate compliance, but they also provide an additional layer of transparency, accountability, and peace of mind.

4. Single and bulk export capabilities

FutureVault provides powerful search capabilities at the document, folder, and contact levels, allowing for easy access and discovery of all content.

This is made possible by automatic Optical Character Recognition (OCR) technology and text extraction for image-based files.

All documents, including emails, scanned PDFs, and images with handwritten markings, can be exported and downloaded individually or in bulk at the folder level, enabling quick and easy retrieval on demand.

Audit trails associated with documents can also be exported in bulk, on request, for recordkeeping purposes and to provide to regulatory authorities as requested.

5. Single source of truth for all enterprise, advisor, and client records

For the majority of our clients, the FutureVault platform has become the single source of truth for all critical documentation; enterprise, advisor, and client documents.

Our multi-tiered platform architecture is what makes this possible; this essentially means that there are different levels, roles, and access permissions for the different levels of an organization.

At the head office/back office level (which includes Broker-Dealers), administrative users can retain, store, manage, and access all critical enterprise and compliance-related documentation. Head office teams can also exchange documents with advisors and view document exchanges between advisors and clients.

At the front office or advisor level, advisors can manage their critical business (practice) documentation, exchange and share documents with their home office or Broker-Dealer, and can engage in securely delivering and exchanging documents with clients.

At the client and household level, clients are provided their own client-facing digital vault (the Personal Life Management Vault™) where they can manage, share, access, and exchange the necessary documents related to the business relationship between them and their advisor.

As a firm, having access to all of these different levels and types of documents enables you to move away from the use of multiple, disparate systems, to now taking advantage of a single source of truth for all types of records.

6. Secure and compliant document exchange tools

With secure document exchange tools and functionality, FutureVault helps firms, advisors, and clients protect sensitive information exchange by ensuring that all exchanges take place within the Vault, for efficiency and security purposes. This also ensures that all information and document exchanges that do take place are tracked via the audit trail functionality, ensuring compliance coverage and peace of mind.

Features and tools include, but are not limited to:

  • Secure document checklists
  • Inbound-only unique email forwarding
  • Encrypted file-sharing link
  • Automated document delivery with integration and APIs
  • Secure bulk upload capabilities
  • Global Folders and pre-populated documents

7) Streamline audits with secure permissions to auditors

FutureVault’s patented Trusted Advisor permissioning model enables firms to securely grant permissions to third parties involved in various areas of their business, including external audits by organizations such as FINRA and the SEC.

Trusted Advisors are granted access to discrete portions of the Vault that they are permissioned into, allowing them to view, access, and manage content and documents depending on their level of permissions.

All activities performed by Trusted Advisors, including auditors, are tracked and recorded in real time through the audit trail functionality.

By providing a centralized environment for auditors to conduct examinations, firms can confidently demonstrate compliance and respond to document requests in real-time, on demand.

Another proven way to help streamline the entire audit process is by switching your onboarding process to a digital onboarding provider to ensure compliance across the board, better back-office handling, recordkeeping, and an overall better experience.

Final words about meeting books and records compliance

Maintaining proper books and records compliance is crucial for businesses of all sizes and types.

Not only is it required by law, but it also plays a vital role in establishing trust and credibility with clients. By keeping accurate and up-to-date records, businesses can demonstrate their commitment to transparency and accountability, as well as their ability to operate efficiently and effectively.

With the advent of cloud-based digital solutions such as digital document Vaults, firms can automate and streamline record-keeping processes, reduce the risk of errors, omissions, and non-compliance, while also improving overall productivity and cost-efficiency.

In today’s fast-paced and highly regulated environment, staying compliant with books and records regulations is no longer optional. It’s a necessary part of doing business that can help ensure long-term success and growth.

Want to learn more about how FutureVault can ensure that your organization meets SEC 17a-4, or another regulation? Get in touch with our team today to book a discovery call with our Solution Experts.