Successes - Kovack Securities, Inc.
Fortis Workflow Helps Top Financial Services Firm Better Serve Brokers

Kovack Securities, Inc., based in Fort Lauderdale, Florida, is one of the country’s top 100 independent broker/dealers. Kovack is comprised of more than 300 registered representatives. The company provides them with tools and resources to manage the complexities of running their businesses. Implementing Westbrook Fortis document management softwareis in keeping with Kovack Securities’ goal of freeing advisors from dealing with logistics so that they can focus on the needs of their clients.

Financial transactions are highly regulated, and without automation the extensive paperwork is time consuming. “Every transaction must be recorded. In many cases a signed document is required, and our compliance department has to show evidence of review,” explained Mike Bewley, chief operating officer at Kovack Securities.

Speedier account set up
Kovack’s corporate office processes up to 100 new account applications per day via the trade desk which opens accounts and processes stock and bond trades. Each application has a minimum of five pages. If it’s a corporate or trust account application, it may have 50 pages. These applications are reviewed by the compliance department which makes sure brokers operate in accord with the rules and regulations of the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC).

Before implementing Fortis workflow, financial advisors filled out the applications and sent them to the corporate office via overnight mail. “We would receive the application the next day, review it and make sure it was complete. NIGO is an industry term that means not in good order. Our NIGO rate was about 30%,” explained Bewley. “That means that about one in three applications had missing information.”

Today, using Fortis workflow, representatives enter an applicant’s information electronically. If information is missing, they get an error message and the form will not print until all data is provided. Once the application is complete, the representative prints the form and the customer signs it. Then the representative scans the signed application into Fortis using an electronic workflow that routes it to the corporate office. The compliance team reviews it, and approved applications go to the account processing team. Prior to Fortis, this team would scan the application and spend about ten minutes on data entry. Now they review the application in electronic form, make sure it’s cross-filed in the account entry system and click OK.  

Growth without adding administrative staff
“What used to take 20 minutes from beginning to end, now takes considerably less time,” said Bewley. “I was able to eliminate one position from that department and reallocate it. There are five people in that department now, and we process the same amount of business that our competitors do with eight or nine employees. We are able to grow our business without adding administrative staff.”

Before the implementation of electronic workflow, it took about two days from when a client signed an application to approval. The automated process enables same day approval. “The representatives love it,” Bewley said. “Their accounts are set up more quickly, and they save the cost of sending paper applications via overnight mail.”

“Once we rolled this out, we began automating workflow for other types of approvals. We’ve also integrated Fortis SignIt so our compliance department provides evidence of principal approval through an electronic signature pad,” he said. “This has saved us money and time because we don’t have to print out documents to sign them.”

In some cases, Kovack uses Fortis workflow alone to provide evidence of principal review. There’s a Fortis data field that has a security setting which only allows certain users to change it. They can choose a compliance status from a drop down menu and indicate whether the application is approved, NIGO or rejected. Fortis records the name of the user who acted on the document, along with a date and time stamp.

More than 2,000 items were processed through Fortis workflow in 2010. Other documents, including broker licensing paperwork, are archived in the Fortis repository. “We take advantage of the different document types, index fields, and the security features across departments,” Bewley said. “Fortis has increased the speed at which we can look up information – whether it’s needed to answer a question from one of our registered representatives or a regulatory request from our compliance department.”

Now that brokerage accounts are set up using Fortis, Kovack is planning to automate the processes involved in setting up mutual fund and insurance applications.

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