APEXA screening tool will be delayed

APEXA, a subsidiary of Toronto-based insurance-industry consulting and outsourcing firm LOGiQ3 Corp., is working with a group of major life insurance companies, managing general agencies (MGAs) and industry vendors to develop a centralized database of insurance advisors. The goal is to improve efficiency in the screening and contracting process by consolidating information about advisors’ licences, errors and omissions insurance, and relevant background check information in one place. The initiative will replace the need for each firm to collect the same information about each advisor, as firms do now.

APEXA had planned to launch the initiative in January 2016. However, the firm announced in December 2015 that it would postpone the launch until mid-2016 in order to make changes after issues were identified during testing of the system by APEXA’s industry partners.

“Everything that the client [firms in the industry] requested was built, but they realized during training that the way [the tool] interacted with their internal processes was not going to be efficient,” says Tonya Blackmore, CEO of APEXA. “So, we have to go back and revise some sections. The whole point of [the tool] is to simplify processes, so it makes sense for us to take more time to make these improvements.”

The delay comes as APEXA has begun promoting its new system actively to the advisor community, as well as educating advisors on how it works. Blackmore says that although the bulk of the feedback from advisors has been positive, some independent advisors have expressed concerns about the initiative. In particular, she says, some advisors have raised questions regarding the fact that insurance product manufacturers are involved, given that the project relates to independent distribution.

“There’s been a little bit of worry about what [this means],” Blackmore says. “We are working with nine carriers and MGAs to build out the solution, and we need to do that so we get it right. There’s been some confusion. Some people think that we are owned by our clients, and that has raised questions.”

Blackmore says APEXA is a privately held company, and is working with insurance industry firms simply to get their input into the system’s features and functionality. “We see the value in working with the industry,” she says, “and that will continue, after we go live, through a formal advisory committee made up of industry participants.”

Advisors have also raised concerns regarding the extent to which their interests are being represented in the APEXA tool, Blackmore says.

The developer’s advisory committee, which will guide the future direction of the initiative, is composed of seven representatives from MGAs, seven reps from insurance carriers, and one rep from an advisor association. The initial advisor rep will be Greg Pollock, president and CEO of the Toronto-based Financial Advisors Association of Canada (a.k.a. Advocis).

That lineup does not leave an opportunity for active insurance agents to provide input on the system, says Lawrence Geller, president of Campbellville, Ont.-based L.I. Geller Insurance Agencies Ltd.

“APEXA is a two-sided tool. One side faces the MGAs and the insurance companies – they have to have input on what they need. The other side faces the agents – they have to have input on what they need,” Geller says. “If insurance agents are going to be using the system, then they will have comments and thoughts about ways the system can be improved.”

Blackmore says APEXA is planning to create a subcommittee of advisors to provide input and feedback on the system: “We believe that there’s value in having an advisor component to our subcommittees. Once [advisors] are using the system, insight from advisors will be really valuable as APEXA [the tool]evolves.”

Since the project involves the gathering and sharing of information about advisors, questions have been raised within the advisor community regarding privacy and data security.

“There are some people concerned that when you have big data, all of a sudden the information is out there, and what’s going to be done with it?” says Jim Ruta, president of AdvisorCraft Media and Consulting in Toronto, and a video columnist for Investment Executive.

In addition, if industry firms are going to be relying on the information in the system, Geller says, advisors need assurance that appropriate measures are in place for ensuring that all of the information is accurate and up to date.

The concerns voiced by advisors have been disappointing, Blackmore says. “We’re not here to do anything controversial or do anything negative for the industry,” she says. “APEXA emerged because there was a massive need to simplify compliance and contracting. We’re just trying to fill that need.”

Geller says that APEXA (the firm) has done a good job of addressing insurance agents’ questions and concerns: “[APEXA] seems to be both responsive and with an intention to be accountable.”

If the system works as it’s supposed to, Geller expects that it will be positive for agents. Specifically, he says, the tool will enable insurance agents to keep all of their licensing and contact information up to date and in one place, rather than having to send such information separately to each insurance firm with which they have a contract.

“What [the tool] means is you only have one point of entry,” Geller says. “That alone will make life a lot easier for people.”

The tool will reduce advisors’ compliance administrative workload considerably, Blackmore says.

“Advisors have to maintain compliance and manage contracts, and those are not revenue-generating activities; it’s administration and, right now, it can be a very cumbersome and frustrating process,” she says.

“APEXA simplifies advisors’ ability to contract with MGAs and carriers; it saves them time on things that they don’t want to spend time on.”

Pollock believes the initiative will provide firms with a more comprehensive view of their licensed representatives, which will help to flag those advisors who aren’t suitable to be giving advice due to compliance deficiencies, lack of creditworthiness or other factors.

“We think it will add to the overall quality of advisors out there in the marketplace,” Pollock says. “For those folks who perhaps shouldn’t be licensed, we are hopeful that we will be able to identify them more easily.”

ANOTHER LOGiQ3 LAUNCH

The consulting and outsourcing firm that spawned the APEXA Corp. insurance advisor compliance initiative has turned its attention to a different segment of the financial services sector with the launch of a compliance tool for deposit brokers. This new initiative has taken the Barrie, Ont.-based Registered Deposit Brokers Association (RDBA), the professional standards association for the Canadian deposit broker industry, by surprise, however, as the new tool competes directly with the compliance offerings that the RDBA already provides.

In late 2014, Toronto-based LOGiQ3 Corp. announced the launch of a new tool to help financial services institutions (FSIs) ensure their contracted deposit brokers are meeting regulatory requirements and contractual obligations.

The tool, called the A3 Solution, has three components: an annual compliance attestation (ACA), which consists of questions that deposit brokers must answer about their business practices, regulatory licensing and other matters; an anti-money laundering (AML) e-learning course; and an auditing service. The results of the three components are then reported to FSIs for those firms’ compliance records.

In June 2015, the Toronto-based Financial Advisors Association of Canada (a.k.a. Advocis) teamed up with LOGiQ3 to become the provider of the ACA and AML components of the A3 tool.

“Financial services institutions want to make sure that deposit brokers are meeting some sort of standard,” says Greg Pollock, president and CEO of Advocis. “[A3] is an industry-led solution to ensure greater compliance in the field.”

However, this kind of tool already exists at the RDBA, says Brian Evans, chairman of the RDBA’s board of directors.

“I’m not sure why they’re creating a compliance program for deposit brokers, since we already have a tested program set up,” Evans says.

Specifically, he says, the RDBA provides AML testing, as well as a compliance questionnaire that deposit brokers complete each year to demonstrate to FSIs that they are compliant.

“We’ve had our compliance testing and AML testing for about five or six years now,” says Evans. “We keep track of those [advisors] who do their testing, so we can let the deposit manufacturers know that their agents are compliant.”

But Pollock says the A3 tool provides an alternative option for industry players: “Our sense was [the existing offering] was not meeting the needs of the full marketplace.”

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