Go Small or Go Home: Rethinking Ballooning Data a.k.a. The Great Data Manure Crisis of 2017 Rob Dearman, Bob Gager, Jamie Taylor

#IRIOpsTech

#IRIOpsTech

#IRIOpsTech

#IRIOpsTech

#IRIOpsTech

#IRIOpsTech

#IRIOpsTech

Industry Infrastructure In support of the domestic and global financial markets, DTCC processes over 100 million transactions every day. $1.503 quadrillion of securities transactions settled in 2016 14.1 billion insurance transactions total in 2016 $5.2 trillion settled in mutual fund FundServ transactions $92.8 billion settled in I&RS transactions #IRIOpsTech

What’s the Problem? #IRIOpsTech Data File Creation Data File Movement File Size – not enough time to create and send Numerous Legacy Administration Systems Limited ability to support “optional” data Data File Movement Batch versus real-time Pass-through versus repository Required versus optional fields Data File Receiver Too much or too little data Data Conformity - data not “apples to apples” from carrier to carrier Not receiving “optional” data #IRIOpsTech

Is It Really Optional Anymore? DTCC Positions (POV) File DTCC Financial Activity Reporting (FAR) File 171 total data elements 38 Required (22%) 32 Optional/Conditional (18%) 101 Optional (60%) 139 total data elements 41 Required (29%) 40 Optional/Conditional (29%) 58 Optional (40%) #IRIOpsTech

So What’s The Answer? #IRIOpsTech

The Increasing Expectations Processing Category Mutual Fund Variable Annuity FINRA License 6/7/63 with continuing education FINRA License 6/7/63 with continuing education Life Insurance License per state with NAIC required 4 hour continuing education Insurance carrier appointment process per state per carrier with sponsor-specific requirements 1 Licensing and Registration Requirements New account form Order memo/suitability & disclosure form New account form Order memo/suitability & disclosure form Insurance disclosure VA specific suitability data for FINRA 2330 and NAIC VA 1035 exchange comparison 2 Broker/Dealer Required Paperwork Application (4 pages) Prospectus (44 pages) Application (12 pages) Prospectus (806 pages) Carrier illustration 3 Product Manufacturer Required Paperwork

The Increasing Expectations Processing Category Mutual Fund Variable Annuity Efficient fund investment process (same day settlement if before 4pm) Copy goes to OSJ manager Fund Investment awaiting 7 day 2330 process FINRA Rule 2330 requires compliance approval prior to funds being invested Compliance approval must occur within 7 days or paperwork needs to be restarted 4 Broker Dealer Compliance Approval Product manufacturer reviews application and conducts additional suitability review Additional documentation may be required based on additional review and NIGO processing Carrier to Carrier 1035 Exchange process (days or weeks to complete) Funds Invested Funds Invested Confirmation sent to consumer 5 Product Manufacturer Processing Electronic transactions and fund account changes Manual transactions and policy changes Additional BD compliance pre-reviews on many policy changes Additional Carrier NIGO review on many policy changes 6 Post Investment Servicing

The Hassle Factor Total Pages per Client Packet Number of Required Data Elements Total Pages per Client Packet Number of Required Forms Average Days to Process (after IGO) Source: National Planning Holdings Operational Processing Study, 2015-16 (American Funds vs. Perspective VA, IRA, $100k qualified client)

The Advisory Baseline – Table Stakes Product Research Proposal, SIS, IPS (not to be confused with an app or illustration) Model Management – asset allocation builder Trading and Rebalancing Billing Administration Data Reconciliation Performance Reporing (online) QPR Generation

#IRIOpsTech