As you are starting the program for your nontraditional vendors, I would suggest you do two things.
First, document the rationale for why these vendors are out of scope for your regular program.
Second, perform a category-level inherent risk assessment to determine what risks are present in the distributor and money manager categories. Those risks should inform the due diligence you perform on them. In some cases, you may decide that the risks are higher than once thought, and you may decide to move those categories back in scope.
If they stay out of scope, you should perform some due diligence. In the case of money managers, there is the https://brokercheck.finra.org/ website that can be used as a resource. Additionally, I would recommend these questions to every money manager.
- How long have you been in the industry?
- Where have you worked?
- Are there any complaints, disclosure events, or sanctions in your file?
- How have you been compensated?
- What degrees, licenses or professional designations have you earned?
Those are my thoughts; I hope they are helpful. I am always interested in what other members think.
Original Message:
Sent: 04-22-2021 05:02 PM
From: Anonymous Member
Subject: Non-traditional Vendor Oversight
This message was posted by a user wishing to remain anonymous
We're in the process of creating a program for our non-traditional vendors. We do not perform regular vendor assessments for our non-traditional vendors (i.e., distributors, money managers); however, we do want to perform some level of oversight.
How are you handling non-traditional vendors at your firm?