With newly strengthened customer suitability rules in effect starting today, BondDesk Group LLC announced the availability of an advanced new Suitability Module for its award winning BondWorks Wealth Management Platform.
BondDesk is a leading provider of fixed income technology and operator of the largest odd-lot fixed income alternative trading system (ATS) in the United States.
The BondWorks Suitability Module helps financial advisors meet the requirements of the new FINRA Rule 2111 by enabling them to run pre-trade suitability tests on investment ideas even before recommending them to their customers. The module provides alerts when potential transactions may not be suitable for a customer's investment profile, halting potential violations before they happen. Lack of pre-trade suitability testing can lead to weakened investor relationships and a greater risk of costly trade cancellations and large fines for the advisor's firm.
"Most suitability software systems today operate post-trade, thereby missing the requirement that recommendations, not only transactions, be suitable," said Kamaryn Tanner, Managing Director at BondDesk Group. "Our clients are thrilled with this new module because it helps keep costs down while at the same time provides the financial advisors with a tool that helps them build trusting relationships with their customers."
"The strengthened suitability rule from FINRA is extremely important, as it serves to further protect end investors and the advisors and firms that serve them," said Will Rhode, Director of Fixed Income Research at Tabb Group. "With all these new regulations, it's important that vendors are proactive in helping firms navigate this increasingly complex environment to better serve their customers and ensure they remain in compliance."
Background on FINRA Rule 2111
New FINRA Rule 2111 requires that a firm or associated person "have a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer, based on the information obtained through the reasonable diligence of the member or associated person rson to ascertain the customer's investment profile." FINRA originally proposed Rule 2111 on November 17, 2010, with an original implementation deadline of October 7, 2011. However, the deadline was extended to July 9, 2012 to allow firms additional time to update systems and modify procedures to ensure compliance with the new rules and regulations.