Finally, mutual fund dealers PFSL Investments Canada Ltd., Professional Investment Services (Canada) Inc. and Sentinel Financial Management Corp. are doing away with printed copies of documents and moving toward a paperless workplace.
What is motivating these firms to go this route? What steps are they taking in order to rid themselves of paper? Moreover, to what extent is it even possible, given the endless compliance rules?
The three are taking a different approach to going paperless.
Markham, Ont.-based PIS is employing a paperless model between advisors and head office. “Rather than faxing documentation to us or to the fund companies,” says Ken Rousselle, PIS’s president and CEO, “advisors now scan any information related to a client or a trade, and our software will automatically store it where everyone can see it.”
Although this is an efficient way of reducing paper, it doesn’t eliminate usage completely. The firm still requires a paper trail for compliance purposes. “The problem is that the regulators still require us to hold physical documents for a period of seven years,” Rousselle says. “So, we haven’t eliminated the need for paper. What we have eliminated is the need to send it back and forth and to print it multiple times. Until regulators consider a scanned copy an original document, we will never get rid of the requirement for paper.”
However, Rouselle holds out hope for the future: “Obviously, I would like to see a totally paperless environment, in which electronic documents that are stored can be considered originals in a court of law and be defensible. We can then eliminate the entire paper flow.”
Saskatoon-based Sentinel, too, is attempting to move away from paper, although it is in the early stages of the process. Over the next three years, Merlin Chouinard, the firm’s president and chief compliance officer, would like to see a system in which the transaction — from the point of sale onward — is done electronically.
“That will be the ultimate,” he says. “There are firewalls in place, however, as far as compliance goes, and as to approval and signing off.”
Sentinel has a technology specialist and a member of its compliance team working in conjunction with its back-office department to ensure everything is compatible. The next step is to introduce the scanning equipment, which would then be used in the same fashion as PIS’s system.
“A rep would simply bring his or her paperwork into the organization, the back-office people would process that business as they do now, and scan it into an electronic media, which is then complementary to our back-office system,” Chouinard says. “Once we know that step is working smoothly, then we will go full tilt, which is to take [the information electronically] right from the point of sale.”
Chouinard is cognizant of the fact that if the firm is to move forward, it must ensure that it is onside with compliance regulations. “We must be very careful to make sure that our processes are all approved by the Mutual Fund Dealers Association of Canada,” he says, “especially when it comes to compliance, suitability and review.”
Meanwhile, Mississauga, Ont.-based PFSL is forging ahead with the paperless business model that was launched by its parent in the U.S. about three years ago and which began migrating to Canada a year afterward.
PFSL has two paperless electronic applications in Canada. One is for clients’ life insurance applications and the other is its independent business agreement (IBA), the contract between advisors and the firm’s head office.
“For our paperless model, [the insurance application] is on a hand-held device,” says Jeff Dumanski, PFSL’s president and chief marketing officer. “We go to the clients’ home and sit across from them at the kitchen table. When we get to the application itself, there is a lot of pre-population of client information and there is an electronic wand or pen the client can use to answer ‘Yes’ or ‘No’ to all the standard questions. Then, at the end, there are electronic signatures.”
For both the electronic life insurance application and the IBA, there is still a physical document involved. “With life insurance, the application comes in paperless,” he says. “But there is still a paper copy of the application inserted into the policy. With the IBA, we hand out a supplementary copy that is less onerous and less paper-intensive than the original [copy of the] electronic document [would have been].”
@page_break@There are a slew of motivating factors fuelling the conversion from paper, Dumanski says. One of the main reasons is ensuring that firms don’t take a hit on their bottom line. “There is a consciousness of paper these days,” he says. “Right now the provinces are assessing companies on recycled waste and they are charging us for paper waste.”
Sentinel’s Chouinard adds: “We just found we were pulling files that are an inch-and-a-half thick after 20 years of being in business. We were spending a fortune — and still are — on storage space and square footage that is useless because it is full of files.” IE