Newly Formed Consultancy Offers Compliance Branch Inspections for Independent Broker-Dealers and their OSJ Managers for a Single Flat Fee
New Offerings Position IBDs to Potentially Drive Greater Margins and Lower Compliance Risks for Smaller OSJ Teams
Firm Encompasses 10 Seasoned Compliance Supervision Professionals Across the Country with a Combined 200 Years of Experience and Multiple Supervisory and Compliance Credentials
DELRAY BEACH, Fla., Aug. 13, 2019 /PRNewswire/ -- Essential Edge Compliance Outsourcing Services, LLC ("Essential Edge"), a regulatory and compliance supervision consultancy, today announced its launch with the mission of substantially reducing compliance risks and costs for broker-dealers required under securities regulations to conduct branch inspections. The firm delivers comprehensive outsourced compliance branch inspections to Offices of Supervisory Jurisdiction (OSJs) and financial advisor practices affiliated with independent broker-dealers (IBDs) throughout the country. Essential Edge's service offerings are geared at helping IBD firms of all sizes rapidly identify and resolve compliance issues in their branch offices' sales and operations before they escalate into expensive, time-consuming regulatory and legal matters.
Founded by industry regulatory and compliance affairs leader Sander J. Ressler, the firm's 10 seasoned compliance professionals deliver comprehensive branch inspections that are exceptionally cost-efficient and higher quality than other in-house and third-party solutions today. Mr. Ressler individually has more than 30 years of compliance supervision experience with broker-dealers and registered investment adviser (RIA) firms. The firm's other compliance professionals have on average 20 years of relevant professional experience and have previously held professional securities compliance registrations or licenses, such as the Series 7, 14, 24, 53 and 66.
Mr. Ressler, Managing Partner of Essential Edge, said, "We're thrilled to launch Essential Edge at a time when broker-dealers urgently need to reduce both costs and risks related to branch inspections for their branch offices," Ressler said. "Until now, IBDs have had to choose between hiring less experienced in-house compliance staffers or delegating branch inspections to OSJ managers. Using OSJ managers as examiners raises significant potential conflicts of interest because they still have their compensation tied to the financial performance of the office they are auditing for potential supervisory problems. Both choices drive an accelerated level of regulatory and compliance risk to the IBD, the branch office, the financial advisors and ultimately the investing public."
"Essential Edge has built a better mousetrap, both in terms of helping to protect the firm from regulatory risks, and in containing the costs of this protection," Mr. Ressler said. "Our team encompasses compliance experts with decades of experience in the financial advice industry, and we deploy their expertise on a flat-fee basis to cover each step of the branch inspection process. The IBDs and OSJs we work with get a top-notch examiner who is extremely well versed in compliance and regulatory affairs, and they're getting that level of expertise at an incredibly competitive cost under a single, flat-fee structure."
Essential Edge noted that its solutions are particularly applicable to small OSJs, including those affiliated with small to mid-sized IBD firms. The firm defines "small OSJs" as independent branches affiliated with IBDs encompassing one to three independent financial advisors, with an average of less than $250,000 annual revenue per advisor.
Essential Edge's launch was informed by extensive due diligence about the top compliance risk concerns of senior executives at IBDs across the country. In particular, the firm's start-up diligence discussions revealed that numerous senior executives of small and medium IBDs had one top universal concern: Undetected selling away and undisclosed outside business activities on the part of small OSJ branches, carrying severe legal and regulatory penalties, have the potential to bankrupt their IBD.
Commenting on Essential Edge's research and due diligence on top IBD compliance risk concerns, Mr. Ressler said, "As recent arbitration verdicts and regulatory actions indicate, for many independent broker-dealers, the worst-case regulatory risk scenario is when a branch office thousands of miles away from their supervisor has – either intentionally or unwittingly – fallen out of compliance in their financial product sales."
"These issues can potentially become multimillion-dollar liabilities for the IBD involved, to say nothing of significant reputational damage, all of which together could represent an existential threat to the entire business," Mr. Ressler continued. "After considering payout percentages for IBDs that likely range from 80% - 95% of GDC, one low producing representative who barely contributes any net revenue can bankrupt a firm with one significant arbitration verdict."
Mr. Ressler concluded, "Catching these risks before they turn into huge lawsuits or regulatory actions is the name of the game, and with our team of experts we can potentially save IBDs big headaches and even larger financial penalties. By enabling IBDs to conduct rigorous branch inspections of OSJs in an economically and logistically feasible way, Essential Edge is providing the broader industry with a powerful tool to rejuvenate the profitability and strategic value of serving OSJs and independent producers, as they continue to represent a large segment of the financial advice industry."
About Essential Edge Compliance Outsourcing Services LLC
Essential Edge Compliance Outsourcing Services, LLC ("Essential Edge") is a strategic consultancy specializing in compliance and regulatory affairs. Headquartered in South Florida and encompassing 10+ seasoned compliance supervision professionals across the country, Essential Edge delivers outsourced branch inspections to Offices of Supervisory Jurisdiction (OSJs) and independent financial advisor practices affiliated with broker-dealers throughout the country. Essential Edge's service offerings are designed to rapidly identify and resolve compliance issues in branch office sales and operations for independent broker-dealers before they escalate into expensive and time-consuming issues. For more information, please visit www.eeoutsourcing.com.
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