How to choose the right CFO for the FINOP role at your brokerage firm

LOS ANGELES - Nov. 30, 2015 - PRLog -- Staying on top of all the regulatory requirements places a huge overhead burden on small to mid-sized brokerage firms. The reality is all BD firms these days are facing the same dilemma; where to cut costs while keeping risks at a minimum and overhead under control.

Many firms are finding the cost of a CFO with the expertise to handle their business needs is beyond reach. It’s simply much more expensive these days to run a brokerage firm, and cutting costs wisely has taken a front seat.

Broker-dealers looking to outsource their FINRA required financial and operational responsibilities need to make key considerations in hiring a  firm that meets their needs. The list below is a great place to start.

1)      Know the rules.  US broker-dealer firms are required to onboard a FINRA series 27 or 28 professional. The Series 27, Financial & Operations Principal (FinOp) is able to perform mandatory financial and operational functions for Brokerage firms. Series 28 licensee’s are limited by NASD rule 1022.

2)      Research the outsourced FINOP firm. Take FINOP services seriously and seek only industry qualified firms.  Broker-Dealer firms have special FINOP needs, so stick to industry seasoned professionals. Look for a firm that has been in business a long time with seasoned professionals who may hold complimentary series and industry licenses, beyond series 27 or 28.

3)       Investigate.  Look up their track record on FINRA BrokerCheck database by checking for regulatory events and other incidences. How many BD firms are they registered with? Are there any recent disciplinary incidences?

4)    Hire quality. Does the FINOP have the right experience? Ask about the types of firms the FINOP service handles. Do they have industry specialties and knowledge beneficial to your firms’ growth strategy? What size BD firm can the FINOP usually handle?

5)      Hire what you need. Are there levels of FINOP support? Does the FINOP have resources to serve as the designated licensed professional on record with FINRA, responsible for supervising financial and operational needs?

6)      Consider the future. Can the FINOP perform back-office needs as well? Back-office support includes tasks such as; payroll, accounts payable, bookkeeping, accounting, tax returns, staff training, which may be needed in a pinch at some future time. Also, does the FINOP provide regulatory compliance consulting and support as needed? Having multiple resources all in one place can add convenience and integrated solutions to fit your growth pattern.

7)      Outline the duties the FINOP shall assume. Make sure there is clear written understanding between yourself and the FINOP as to what the FINOP is expected to do. Example; keeping books and records; preparing monthly financial statements; computing net capital needs; filing regulatory reports – FOCUS, SSOI, SIPC, and more; interfacing with auditors and regulators.

8)      Define the ground rules. How will the FINOP interact with your company: Will work be done on-site, remotely, or a combination of both.  How often can they visit on site?  Is the FINOP easily accessible by phone, email, or instant messaging?

9)      How much will it cost or save the firm to outsource FINOPs: Compare the dollar cost of an outsourced FINOP with the salary and benefit package of a full time, qualified CFO. Outsourcing the role can add a layer of access to higher-level talent than your brokerage firm may otherwise be able to afford. Aligning yourself with a FINOP service that grows with your firm and provides additional services as needed can be a smart strategic decision.

The Dave Banerjee CPA firm www.davebanerjee.com specializes in FINOP services on a part-time basis for securities firms.  Using his expertise as an accountant and a compliance consultant, Dave and his team are able to provide insight into defining and implementing your businesses strategic goals. This in turn gives stakeholders and business owners the opportunity to focus on growing and running the business, while resting assured on insight from a neutral party who serves to meet the company’s objectives.