New Research Finds Broker-Dealers Struggling to Maintain Mutual Fund Compliance

For Immediate Release

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Chris McCoin or Richard Smith
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The Business Case for Improving Disclosure and
Productivity with Web-Based Mutual Fund Processing

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NEW RESEARCH FINDS BROKER-DEALERS STRUGGLING TO MAINTAIN MUTUAL FUND COMPLIANCE-TIME CONSUMING PAPERWORK & COMPLEX CALCULATIONS LEAD TO LOWER PRODUCTIVITY

Hobson Study Identifies Top Three Challenges for Mutual Fund Trading as Lengthy Transaction Time, Decreased Productivity and Time-Consuming Compliance Support

Andover, MA, October 1, 2007 - According to a new study from Hobson & Company, a leading modeling and research-based consulting firm for technology vendors and purchasers, mutual fund providers are increasingly looking to web-based solutions as a way to adhere to complex compliance regulations and bolster their representative's productivity.  The research report, entitled "The Business Case for Improving Disclosure and Productivity with Web-Based Mutual Fund Processing," found the lengthy transaction time needed to process a new mutual fund account as a primary obstacle to ensuring mutual fund compliance, followed by decreased productivity/overall job dissatisfaction for reps, and finally operational inefficiencies due to updating and maintaining paper prospectuses.   

With compliance oversight from the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA, formerly NASD) reaching an all-time high, and with tightened enforcement over mutual fund sales, the Hobson study found the job of registered representatives relying on traditional paper based-methods has become increasingly complicated as they strive to meet the reporting and compliance demands of these agencies.  The research found the key challenges reps face when trying to adhere to the regulatory requirements and compliance rules required when opening a new mutual fund account for investors to be:  fund share class suitability, breakpoint calculations and efforts related to reprocessed trades.  In fact one respondent, a VP of Operations at a National Insurance Broker-Dealer said, "It takes our reps eight minutes per trade to look up the proper share class," while a Representative from a Bank/Brokerage Private Client Group stated, "I needed to go to each mutual fund company's website to determine where the breakpoints were."

The study also found that internal and external calculators, spreadsheets, poor technology and cumbersome reports led to unhappy reps and lowered their overall job satisfaction.  Worse, the report concluded that reps had become complacent and therefore tended to offer the same funds over and over rather than trying to understand or recommend a new mutual fund -- something that can raise a red flag with FINRA and trigger an examination.

"Our research clearly identified the key challenges facing mutual fund brokers and dealers and reiterated the need and over-all strategic benefits of implementing a web-based solution for mutual fund compliance," said Jami Axelrod, partner and author of the Hobson report. "Organizations that invest in electronic compliance tools realize a significant return on their investment not only in terms of compliance, but also in terms of rep productivity."

"The Hobson study validates the enormous process improvements and strategic business drivers that can be realized by adopting a sophisticated and cost-efficient electronic process," said Russell Planitzer, NewRiver Chairman and Chief Executive Officer.  "NewRiver has helped most of the leading financial services companies streamline their compliance initiatives, decrease their operational costs, improve their employee productivity, and enhance their customer relations.  Utilizing our electronic platform, our customers have realized significant cost savings and a demonstrable competitive advantage. In other words, they are spending less and getting it right."

Building upon its ongoing commitment to promote the importance and necessity of comprehensive e-delivery solutions, NewRiver commissioned an independent research study to better understand the magnitude of the key business drivers of implementing a web-based solution for mutual fund compliance.  To download a complimentary copy of the Hobson & Company report, visit www.newriver.com or call 978-247-7200 to schedule a free compliance risk and operational efficiencies assessment.

About NewRiver, Inc.

NewRiver, Inc. is the industry leader for electronic compliance and intelligent document services for the financial brokerage and retirement industries.  NewRiver's solutions enable financial brokerages, retirement plan providers, variable annuity providers, and retirement plan record keepers to dramatically decrease operations expenses, to strengthen customer and business partner relationships, and to improve the productivity of their employees. NewRiver currently serves more than 100 top financial companies, including Allianz/USAllianz Securities; Coates Analytics; E*Trade Securities; First Allied Securities; Lincoln Financial Group; MFS Retirement Services; Park Avenue Securities, LLC, an indirect Wholly-Owned Subsidiary of The Guardian Life Insurance Company of America; Southwest Securities; UBS PaineWebber; and, Wachovia Securities.  NewRiver is headquartered in Andover, Massachusetts.  For more information, please visit www.newriver.com.

About Hobson & Company

Hobson & Company helps early stage technology vendors and purchasers uncover, quantify and validate the key sources of value driving the adoption of new and emerging technologies. Our focus on robust validation has helped many technology purchasers more objectively evaluate the underlying business case of a new technology, while better understanding which vendors best deliver against the key value drivers. Our well researched, yet easy-to-use ROI and TCO tools have also helped many technology companies better position and justify their unique value proposition. For more information and specific client case studies, please visit www.hobsonco.com.