What is the value of Smartria compliance software from the perspective of compliance consultants, but also just how I think others will see it and what some of the strengths and concerns would be. So the first one that you mentioned, with regard to consultants kind of fear of putting clients on there is that, is that a fear? Because and I don’t know if you’ve been told this, but because well, now my client can get some of your template stuff on there. What what’s my value proposition? If, if the client goes on there, and they and they have all these tools already? Why did they need me? Is that is that one of the concerns?


Yes. And I don’t think it’s just for the templates, you know, so we have consultant partners, for example, who do marketing or advertising reviews? You know, who do the employee surveillance, trade reviews? etc. So there are things that they do they see is value add for their customers that they charge their customers for? If our platform does those things, you know, what happens to that for them?


So if those two really and correct me if I’m wrong, the advertising review, like you guys are looking to put a process in place to make it easy for the Chief Compliance Officer and maybe the consultant to run the review and show evidence of the storage and Mike, but you guys aren’t looking to get into the business of having smart raa people. Do those reviews. Is that? Is that correct?


100% Correct.


Yeah. So So I think across the board, on one side, right, so So there’s no question that there’s some of your services. Really, it’s only the trade monitoring, that can potentially take some some bread out of their mouth. Even then, not not completely. So. So let’s talk about outside of that first. So outside of the trade monitoring, everything else is just going to make it easier for the client to engage the consultant. And I think this is what you mentioned, to really save the consultant administrative time in working with that client. So the email back and forth about, you know, can you send me this, that this will allow the system to handle that the administrative time of shooting out 20 emails to clients, as opposed to setting up a task and using filters to automatically send it to those 20 clients? So I think it’s it’s efficiency. That’s, that helps the client, but probably even more so helps the consultant. I think also, we are showing them or at least on the on on the primary side of the application, is showing them that you are not looking to get into the business of providing the end solution to the clients to customize and create their tasks and content. That’s not and I know, you explained that to us many times. That’s not your business model now, nor is it on any kind of a whiteboard for the future. You work with too many consultants for that to ever be part of your business model. Right. So, so that’s that piece. I think, if there’s concerns about the advertising, you just make that clear. This is totally just to save administrative time and complexity on the trade monitoring. Yeah, I think so I think what you’re saying is you said you have some consultants, where the client might submit their statements in the like to the consultant, who does the front running and restricted securities review. Right. So they’re, they’re fearful that that’ll, that’ll take that ability for them to do that away based upon your tool. Is that right? Yes. Okay. So, I mean, do you have do you allow the consultants to turn on or off? Like you’re marketing to the end advisor? So like, if I had a client on smart I, would you you wouldn’t send something out with like a, like a new Hey, new tool, and here’s how you can engage us for that tool, but that go out to the end users through a consultant.


consultants have the option of telling us what’s what’s okay and what isn’t Like, I think we’ve had that conversation with you guys. I know we have with other consultants.


Yeah, so that’s step one is if if you know, if the client doesn’t know it’s there, then then they’re not going to reach out about it. That being said, everyone else is going to bombard them with these options, or Ryan, you know, whomever you guys know your competitors better than I do. They’re sending those emails all the time. I get them because we start advisory firms in our name. So people think I’m a CCO so I get these advertisements pretty often. So listen, by using us, you have the ability to have us turn certain things on or off, we’re giving you that control that you’re not going to get from one of these other outside providers. So be prepared for that. And if you are able to or do desire using our system, we can still make you as the consultant, the person that gets those warnings or other triggers, when when there’s some type of a violation. But there’s always going to be a price point for the end user. So you’re going to have people that wants to automate and are willing to pay the price. And the question is, do they just find another provider. And now your relationships less sticky, because they’re with another provider? Why not just go with them altogether. So want to make your proposition less sticky. And to use that you have no ability to put yourself in there as the consultant. Whereas if you have a client that has expressed interest in paying for the service, but but, you know, expanding the efficiencies through technology, then it’s a win win and using the smart ra system, because it’s still, it makes the whole thing stickier, because now they’re using it for multiple purposes, and still allows the consultant to have that, that, that oversight and ability to help run the process.


Gotcha. In terms of the consultant role, Dan, you know, of course, we have the compliance corner functionality that, you know, basically the blog that consultants can use to send out change management notices or other things like like you guys are using the platform for? Could you talk just a little bit about the value of that?


Yeah, I think it’s been great. So I use it for for three main thermo, I’m not going to number the net? Yeah. Because I don’t know, how am I going to come up with I use it for multiple purposes. So number one, is the ability to add news, news releases and content, so that that I’ve drafted. So rather than getting their information from all the third parties out there, they send them emails with scare tactics about, you know, here’s a new rule and you better be in compliance. Like, I can now control that narrative. And I can post on on the system, and have the ability to click a button to have an email go out. But rather than it just being an email that’s there and then gone, it’s always also still on the system for my clients that want to look that up in any future date. So for news, I think that’s a really invaluable one, I can get it out there to just my clients, I’m not putting it out there to the whole world. Sometimes I don’t want to go into the whole world. It’s my intellectual property. Next is like knowledgebase articles, which is again, another way of making things more efficient. So you know, I can then control are there certain frequently asked questions that are just not good for me or my client, if they’re asking me simple custody questions, things like that. I don’t want them even though yes, I potentially bill on it. It’s a pain in the client doesn’t want to pay me my billable rate to say, What’s this. So I add knowledge base articles that can then be searched based upon the tags at any time, so it becomes a library or repository for my clients. What that also allows me to do is update certain things without having to go back to every client and tell them by the way, I’ve now updated this content. And here’s a new document. Here’s a new form So the way I’ve used that is with the continuing education requirements for investment advisor representatives, states are starting to roll these out, one at a time, when I’m getting notification, rather than posting a new article. And now Massachusetts did it. And now New Mexico did it. I’m just, I have a continuing education article that discusses each of the states. I also linked that article as content in my task that goes out every year, to remind the CCO to look at the continuing education requirements for their investment advisor reps. So it also gives you the ability to tie it into the tasks, but update it so that those tasks are always updated as as they go out. So that’s a big way that I’ve used it as well. And and yeah, I mean, I think those are the two primary, two or three primary ways.


Gotcha. And is also regarding the consultant role. Just really briefly, can you talk, since we have Matt Jernigan, on the call, just a little bit about what you would like to see in terms of expansion of the consultant role, you know, additional value that we can give to consultants?


Yeah, so I think and you may already have this in place. Right. So this is Mac, you knowing more about the system than I do and how we’re using it. I know, we’re expanding licenses, hopefully, any day now. But I think utilizing the consultant, having the ability to do tasks that launch other tasks is is maybe that how that how that goes. So if I send out a task to a client to do some homework, and then when they complete that task, that it fires off a task to the consultant to review it, or set up a call.




Right. Okay.


All right. That’s a great suggestion. Anything else that comes to mind? How about for for services, like your advertising review? For trade reviews, etc, anything in particular that you would like to see as a consultant?


No, I think actually, that would go a long way towards that ability and responsibility is the ability for a client to say, hey, consultants, I’m launching this task for you. Pursuant to whatever it is, and advertising review, review my trades, review my emails, whatever it is. So I think right now, if if, if one of my CCOs wanted to launch a task for me, which I don’t want them to be able to do for one of my staff members that I could add as a consultant, would they be able to do that?


Yes, but you don’t get notified on your dashboards.


Right. Okay. So probably then a combination of the ability for them to do that to launch tasks, and then have it on an easily reportable and searchable dashboard, so that we can then track them at an enterprise level rather than going into each client. So I is consultant where if I would get it to my assistant, Ina, I’d make her the consultant, she would see okay, we have these 15 tasks that came in from these 10 clients. And just track that as on a dashboard.


Gotcha. Okay. On the file storage side of things, I don’t I don’t know how much you guys are using file storage with us. But you know, of course, we have it. company wide. So everybody in the company can see it. Everybody in the company in the software can see it. But it’s only editable by the compliance staff and or consulting partners. And then we have a directory for each client household. We have a directory that’s available for each account as well as directories that are available only to the compliance and consulting staff. So just at a high level, can you talk a little bit about the value have that?


Yeah. So I think it’s a great value. And we are not using it as much as we should right now and will in the first quarter. So as part of our process, we’re going to just start uploading all of their current disclosure brochures, etc. So we are going to be using it a lot. And I think it’s a really good tool. What what I’m still not 100% sure of. So the way I see it is there’s three at least the way we have things set up right now, because we don’t have the client portal. We have three primary directories. One is everyone that has a license at that company would be able to see the content, right. That’s the company files. We then have I think, the one you’re talking about the compliance, that’s actually called management files, right? Yes, that’s right. Okay. And that, so I’ve never been 100% Sure. on that. One. Is that management? Like, what is management? Is that just anyone that has a license for for CCO? Or compliance? Or? Yes, yeah. Yeah. So, so it’s, I don’t know, if it’s named properly, because I do think that there would be some value in giving the CCO the ability to have something that only they or truly management could see. And I don’t know if that’s practical, though, to do through this system, then this might not be the best place for that. But I think right now, the way it’s in the way, it’s titled is a little bit confusing. Because it’s really compliance. And then the third one is, the third one is like the my directories. Right? And, and the way I thought of that, and correct me if I’m wrong, is that’s literally me as a user where I could put my stuff, is that accurate? Yes, that’s right. Okay, and can the CCO see that though? Yes, they can. Okay, got it. Good, because I was gonna suggest that there should never really be anything on there that the CCO can access.


Yeah, and as a matter of fact, part of the – Matt, correct me if I’m wrong about this – but I believe part of the roadmap for the employee module, so so to speak, is that those personal, like my document, directories that they have, will show up, as, you know, personal files or whatever on the employee?


Hey, it sure is to aggregate all that information in that in that single area.


Currently, you can get to it through editing a specific employee going into the edit menu for a specific employee. But yeah, we’re gonna make it much easier to access.


Okay. Yeah, so I, I do think those directories are great. We should be using them more, and we’ll be in the first quarter. And that was, you know, that maybe a little clarity on those on how those are visible.


Gotcha. On employee trade surveillance? Obviously, we understand the basics. Can you talk a little bit about just the value to consultants, if they were, you already have in terms of hey, you know, they’re, they’re going to receive these inquiries anyway. You know, having smart Tria, use the using smart array solution keeps you stickier. Is there anything else you would add to that just in terms of the benefit to the consultants? Can you make revenue from that with the solution in place?


But yeah, I mean, there’s two ways to make revenue. And one, as I said, I’ll be unfiltered on it. Like, it depends on your relationship with them. So if they’re getting a if they’re getting a discount, if there’s any way they can get revenue from smart RA on it, then that’s revenue that they wouldn’t get if it goes to a competitor. That’s number one. Number two, if they were getting their revenue by doing the reviews for their clients, I still think the system the system will will tell the system doesn’t automatically stop a trade the system doesn’t automatically do the work. The system is the one doing the monitoring. And the chief compliance officer, typically least the way we’re going to set it up, gets anything that’s kind of quarantined, that could be an issue, et cetera, and then they have to do something about it. The consultant can certainly put themselves in that position. And it’s no different than when they were reviewing the actual statements. I mean, we used to do that for a handful of clients that they were able to use, one of my guys to do the review is on a quarterly basis. It wasn’t that much revenue. I mean, it maybe took them a couple hours per quarter, to do all the reviews. So now, yes, maybe now that only becomes a half hour, for a quarter or an hour, it still might be an hour per quarter as you start getting these notifications. So one, it may not take any revenue away from you from an hourly perspective. And then depending upon your relationship with smart Ra, I’ll let you handle that part of it. You could be getting that revenue again that otherwise it’s going to walk all of that walks out the door when they decide to use somebody else’s system.


Gotcha. So let’s see. Moving on to vendor due diligence. Are you guys doing vendor due diligence for your clientele? Do you see value and supporting your customers using our vendor due diligence solution?


Yes, I don’t know how much value that’ll be, though. Currently, that could be a big could be a big tool. In the future. If that SEC proposal goes through about due diligence on like all third party providers. Right now, I still think it’s helpful. From a due diligence for cybersecurity purposes. And data security. I do think that’s something the SEC expects. I just don’t know how much value is put on that. Because during the examination, it’s Did you do any due diligence? It’s not? They’re not really getting hammered on it?


Gotcha. Okay. Let’s see. So, the client view and and fiduciary proof capabilities. That seems to me like the type of thing that would be really difficult for consultants to make revenue off of to be certainly tell me if you think I’m wrong about that. But do you have any thoughts on just the value of those capabilities to consultants?


Which was that one? Yeah, like, kind of suitability investment objectives that that stuff?


That’s that’s the client menu said that the household? The the annual review, new tracking, trading in frequency if if we have,


right, okay, yeah. So. So again, they can make revenue depending upon, you know, if they have a share with you guys of some sort, they make revenue in that it keeps the relationship stickier because that’s still not a service, that smart Ra is taking away anything from the consultant. So it certainly keeps it shows the value that the consultant brought them to this to this tool. And there will definitely be consultants, that again, I think this I think this will be an important feature we talked about earlier, if we make it easy for the client, to the client, meaning the advisor, the advisory firm, to go in there and kind of click to shoot a task, or some other type of support to the consultant like, hey, you know, we haven’t been doing this, or this client just brought up a problem, we have a diminished capacity issue with this client, please help me. So it still gives you the ability to tie the consultant in. Whereas if it’s the advisor having to do the work, give it some consideration, shoot an email, sometimes that gets that gets lost. And it’s also inefficient and difficult for the consultant to manage that and show them have them show evidence that they help their advisor with that. So I still think from a systemic process, that’s where the superiority is, is that it puts it in one system. And if you do have the ability to tie that consultant in there, I do think that that’s another tool.


Okay, so you’ve spoken a little bit about making money through actually providing the platform to the clients and obviously you guys do that through we give you a discount and then you can charge retail or whatever Do you want to and keep the difference? I’ve heard several consultants have hesitancy about that, because, you know, some have said things like, you know, that’s a conflict of interest for us, our, our clients have to maintain control over their conflicts of interest, I’m afraid that will make them angry, because you know, we’re not doing the same thing. Et cetera. So just in general, do you have any thoughts on that ways that we could help them to look at it differently?


Yeah, I mean, I think the way we justify it is, we’re not just using the smart ra system, and just reselling it, you know, I’m spending a ton of time on adding content, adding tasks, working with the advisor, on setup. That’s partially where that comes in to play is our help in developing our instance of smart ra if all they were doing is referring clients to smart Ra. And that’s it, like hands off after that, I use it up, you’re on tasks, you do the content, then I still don’t know that I have a problem with it. Maybe they want to disclose it, like we’re a reseller, and we get a benefit for this. But I don’t know just sounds like somebody who’s kind of a nap, almost like a NAPFA advisory firm that believes that everything should be purely hourly based upon the time and effort they spend. And that’s it. So much like their clients. So if like, if they really feel strongly about that, then just disclose it to their client. But much like we tell our advisors have a story. So our advisors that move from a rap program to a non rap. Your end clients don’t care about that. It’s all going to tell them why, like less, less conflict in our particular case, or allows us to control your expenses better. In this particular case, just have your story ready. Hey, you know what, you’re not getting charged anything more there. We’ve negotiated a rate with smart ra that allows us to provide all of our content and be somewhat subsidized by your by by your membership there.


Gotcha. Okay. So, I know we’re actually I came in at five after. So we’re at the end of the 30 minutes. Do you have any time for a couple more questions? Or should we? Okay. So regarding stratify, which is compliant, can sorry, competitor to risk allies,


right? We had to call it them? Yeah. Yeah.


Can you talk a little bit about what you perceive as as the value of that in smarter AI, a, you know, especially if you see a value to consultants, but you know, just in general, first,


so, so little bit of value for the consultant. But to me, this is what keeps me up at night for some of my clients. And I think anything that allows me to sleep better as the consultant certainly is a good thing. Like, and that’s one thing to consider is like even consultants that are a little less tied to their clients than we are like, I don’t think anyone’s hoping their clients screw up, so they can get additional revenue on representing them. Like that’s, that’s the worst case scenario for everyone, if a firm messes up, and especially as smart ra starts to go upstream for maybe larger advisory firms. I mean, we’re seeing more and more firms over the years, that are becoming an investment advisor version of the friendly broker dealer model, where I let my advisors do what they want. Like they’re, you know, I have back office, I have a compliance department, but they’re the ones picking and choosing the various securities. And what we’ve told advisors over the years is that’s, that’s great. But in the end, you were responsible for all of those reps and their investment recommendations, and the firm has a fiduciary. So you know, what I’m excited about with that process. Again, to bring it into smart ra rather than referring somebody out to another party, is the ability for that CCO to have some level of control on where a client’s account stands with regard to their risk profile. so that they don’t have to look at every single account on a periodic basis, be that quarterly or annually, whatever it is. But the ability to just say, Hey, Bob Smith, five of your clients are showing in the red, because their current investments don’t match their profile. Like, what gifts. And I think that’s the only way that a chief compliance officer can really manage a firm that doesn’t just have set models.


Gotcha. Gotcha. So my last question, this is really quick. I, there’s a company that does financial literacy training for the clients of Ri EAS. And apparently, they have quite a few customers, they keep on approaching us. So I just thought I would ask, do you see any value in a in a partner like that for smart Ria? Well, we’re basically we would be saying to our IRAs, we have this partner that can provide financial literacy training to your clientele.


Minor value, I would never say there’s no value in that. I think you’ll have some advisors that have no interest in it. And you’ll have others that that think it’s great.


Yeah, yeah. That’s kind of how I’ve been thinking about it. I was just curious. Well, we we’ve gone over and, Dan, I really appreciate your time. I don’t know that we’ve received an invoice for the first half hour we spent with you. Just putting that bug in your ear, you know?


Yeah, I put it in. We’re usually a month or so delayed on our billing, right, because I don’t put it in till the end of the month. And then it takes a little while. So that would have been I think it was only last was the last month was it October that we had that call? It was Yeah, yeah. So you may not get that. Or you may have just gotten it even.


Okay, great. I just wanted to make sure that we got that taken care of. Okay, Jen, thanks a lot. Happy Thanksgiving to you and yours.


You guys also it’s good talking. Y’all. Have a great one. Thanks, Dan. Thanks,


Dan. Right. Bye bye so Matt as long as we’re both on still




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