NorthStar Blog

21
Feb

Add FIX Execution to Your Trading Workflow

FIX execution

Orion's trading and rebalancing tools can provide efficiency and time-saving steps, like adding FIX execution to your trading workflow.

The post Add FIX Execution to Your Trading Workflow appeared first on Orion Advisor Services.

21
Feb

Service Oriented Software Development

By Scott Spratlen, Senior Vice President, Technology

I have always loved technology.  Even in grade school, I was doing basic (that’s the programming language name) programming on my Atari.  Typing code into the console, with one joystick and one button. Those were the good ol’ days, it took forever for the simplest program.  While I was working toward my Bachelor Degree in Computer Science I took a class that required building a PC from scratch.  Not assembling a PC with parts, but a bread board, wires, and switches.  While this home-built-PC did nothing more than rudimentary math, I became aware of all of the inner workings of what makes a computer actually work.  It boils down to 0s and 1s, continuous on and offs that cycle and combine to make some incredibly complex technology.  If one of those 0s or 1s aren’t set just right, then the instruction execution goes awry, and the computer doesn’t do what we think it should.  All technology professionals have been in that position before.

As we’ve begun this New Year, I have been reminded of that memory and how similar that is to a service-oriented development team.

A traditional development team creates a product that the company then sells.  Therefore, the development team has a certain visibility.  But, at a company like Gemini, our product is essentially the service that’s provided by our amazing people.  And, our Development Team’s job is to make these people as efficient and effective as possible.  With that, we are typically invisible to our clients, and that’s a good thing most of the time.  We are like a sound tech at a large concert: you would only really recognize our existence if there was negative feedback or bad sound, which is not a good thing.

Don’t misunderstand me, we are happy to directly interact with both our internal and external customers.  Our job truly is to provide support and products that best service the company.  The developers of a service-oriented company actually interact a lot more with stakeholders than a traditional development team.  Traditional development teams would typically communicate through an automated ticket system, and deliver to a business analyst or project manager, who in turn would hand over the project and interaction with the stakeholders.  But in our arena, there are lots of requests from clients and new requirements due to changes in regulations. We must be agile and available to interact directly.  There isn’t time to build and deliver in long cycles.

We do this by implementing a version of agility called Kanban.  It was originally developed by Toyota in the 1940s. Toyota’s focus was to eliminate waste (including time) and limit work in progress (WIP) by focusing on efficiencies and linear processes.  It works great for a high volume of small projects.  This process allows us to continually reprioritize and keep up with shifting demands while delivering automation, process, and product improvements in small iterations.

There are some challenges that go with a service- oriented development department.  A stereo-typical developer does not typically enjoy all of the personal interaction and shifting priorities.  It requires a personality type that can communicate clearly with stakeholders and can handle the constant shifting of priorities.  At Gemini, we have some of the best of the best developers that accomplish this on a daily basis!

We like to think of ourselves as that sound tech at a concert, or even the 0s and 1s that make up the computer.  Even when there is that rare occasion of feedback at the concert, or the computer isn’t doing exactly what you want it to do, we learn from those instances and grow as individuals and as a team. We are always working to provide the best possible service (both products and process improvements) needed to enable the amazing product at Gemini (its people) to be the absolute best they can be.

 

7131-GFS-2/2/2017
2062-NLD-2/17/2017

16
Feb

CLS Talks Risk Management With Paladin Consulting (6 of 6)

Paladin Consulting Company’s Co-founder, Art Lutschaunig gives CLS’s Senior Market Strategist, Joe Smith, CFA, a two part answer to the importance of partnering with a firm like CLS.

16
Feb

Eclipse Is Finally Here!

Know what's coming this weekend in the first Orion software update of 2017. Plus, join the Eclipse movement and learn more about another new Fuse award winner.

The post Eclipse Is Finally Here! appeared first on Orion Advisor Services.

16
Feb

Positioning For Growth

Are You Ready For Distribution?

The Gemini Companies (Gemini) distributor believes successful marketing strategies require a thorough self-assessment during the distribution planning phase and frequent reviews to adjust accordingly. During strategy planning, investment advisors should seek to understand how to access their desired target client with focus on product placement requirements and expected activity. Gaining such understanding will help determine the best course of action to implement your distribution strategy and focus your time and resources in markets that are open to your fund opportunity.

Gemini developed the distribution growth cycle model to assist investment advisors in matching their current distribution characteristics with potential opportunities, allowing managers to tactically develop their distribution plan to match. Gemini’s distributor identified four distribution phases: Raising Capital, Emerging Manager, Growing Manager, and Established Partners. Each distribution phase has distinct characteristics, challenges, and opportunities. The phases are defined as:

FOUR DISTRIBUTION PHASES

Raising Capital – Investment advisors that have less than $250 million in firm assets under management and a fund with less than $100 million in assets. Fund may have less than a 1 year track record.

  • OBJECTIVE – Funds at this phase are seeking to raise capital and raise awareness of their strategy
  • CHALLENGES – Short track record, no Morningstar rating, conservative sales and marketing budget
  • OPPORTUNITIES –Tactical, geographic sales activity within platforms, that are open to listening to a new story

Emerging Manager – Investment advisors with approximately $250 million to $1 billion in firm assets under management and a fund with less than $200 million in assets. Fund may have a 1 to 3 year track record.

  • OBJECTIVE – Firms at this phase have garnered success raising assets and capitalize on that success to elevate awareness of their strategy
  • CHALLENGES – Less than three year track record, at the cusp of Morningstar rating, moderate sales and marketing budget
  • OPPORTUNITIES – With a young track record, broaden product placement within existing platforms and potentially expand to additional platforms. Increase activity in preexisting platforms through meeting participation and creating value add (i.e. intellectual capital)

Growing Manager – Investment advisors with over $1 to $5 billion in firm assets under management and a fund with more than $200 million in assets. Fund track record is 3 to 5 years.

  • OBJECTIVE – Firms at this phase have garnered success and are seeking deeper and broader platform placement opportunities
  • CHALLENGES – Established competition, strategic sales and marketing budget
  • OPPORTUNITIES – Broaden product placement within preexisting platforms, seek new distribution markets, and increase sales and marketing activity at the local, regional and national levels

Established Partners – Investment advisors with over $5 billion in firm assets and with a 5 plus year track record.

  • OBJECTIVE – Firms at this phase have a solid footprint in the investment community, may be seen as a market leader in their space. They are seeking to deepen relationships and product penetration across programs and platforms
  • CHALLENGES – Established competition
  • OPPORTUNITIES – Increase activity in preexisting platforms, create new strategies, seek allocations within recommended programs and seek new platforms open to a proven story

nld-akc-positioning-for-growth-distribution-growth-cycle-chart

 

 

akc-positioning-for-growth-next-steps

 

 

Northern Lights Distributors, LLC

Member FINRA/SIPC

2057-NLD-2/14/2017

15
Feb

CLS Talks Risk Management With Paladin Consulting (5 of 6)

Paladin Consulting Company’s Co-founder, Art Lutschaunig speaks with CLS’s Senior Market Strategist, Joe Smith, CFA, about the future of risk management.

14
Feb

CLS Talks Risk Management With Paladin Consulting (4 of 6)

Paladin Consulting Company’s Co-founder, Art Lutschaunig speaks with CLS’s Senior Market Strategist, Joe Smith, CFA, about the future of risk management.

14
Feb

DOL Readiness Guide

At the time of this writing, the compliance date for several provisions of the Department of Labor’s (“DOL”) fiduciary rule is still scheduled for April 10, 2017. Barring any delays, the day is poised to usher in many changes for the mutual fund industry.

As comprehensive and engaged partners, The Gemini Companies are providing investment managers to 1940 Act Mutual Funds with general share class guidelines to consider as they review the potential impact that the new DOL fiduciary rule may have on their businesses.

STREAMLINING SHARE CLASSES

The fiduciary rule is expected to expedite the industry shift from commission-based products to fee-based solutions offered through intermediaries—a swing that has been apparent since the financial crisis of 2008. In fact, a handful of distributors, including Merrill Lynch and Commonwealth Financial, have already announced plans to eliminate commission-based products.

Halting these types of products will make it easier for investment managers to market their funds to investors because fee-based products consist of generally less expensive and more transparent, share classes. Share classes that are expected to win assets include:

  • Institutional (Class I or Y): This is the preferred share class for large-asset accounts because institutional shares do not have sales charges or ongoing 12b-1 fees, and tend to have higher minimums.
  • Investor (Class N): This share class is most often offered through intermediaries, which may assess 12b-1 fees for shareholder services and do not have front- or back-end sales charges.
  • Class A: This share class includes shares that have higher front-end sales charges with ongoing 12b-1 fees, and have been utilized for asset-based accounts.  If the shares are expected to be sold within one year, Class A shares could serve as substitutes for Class C shares that have back-end load charges. Class A shares that waive their front-end sales charge may also be effective.
  • Class T:  This share class includes shares that have lower front-end sales charges with ongoing 12b-1 fees may be considered as a lower cost solution to traditional C and A shares. This is a relatively new share class structure that has garnered a lot of attention in light of the new DOL fiduciary rule.
  • Class R: These shares are generally only purchased through 401(k) and other employer-sponsored plans, and do not carry front-end or back-end charges. However, operating expenses among this share class may vary greatly among fund families.

These share classes are likely to attract future investments because they are easier to understand, more reasonably priced, and have simplified fee structures. The current share class “alphabet soup” causes much confusion among investors. The fiduciary rule is poised to streamline share classes through its push toward fee-based products. This would greatly benefit investors who would be able to choose from more products composed of the above-mentioned share classes.

NEXT STEPS

Investment managers should review their existing share class lineup to determine potential impacts and if an update to their current share class lineup is in order to stay ahead of this trend. Offering products with more transparent and cost-efficient share classes may enhance managers’ credibility by giving them the opportunity to showcase their cost-conscious funds in a highly competitive market.

dol-readiness-guide-chart-1

SHARE CLASS OPTIONS

Investment managers who determine that an adjustment is needed to their share class lineup have two share class options to consider: Create a New Share Class or Convert an Existing Share Class.

Each of these options require a team of experts to assist with a variety of tasks which include, but are not limited to:

  • Updating Registration Statement
  • SEC filing
  • Fund Board approval
  • Revised contract execution
  • Unwinding or converting a share class, if applicable
  • Blue Sky registration
  • Intermediary communication
  • Repapering of Selling Agreements

Option 1 – Creating a New Share Class

Action Items Fund Partner Timeline
Prepare and file updated Registration Statement with the SEC Gemini Fund Services Legal Team

·         Provides brief legal overview

·         Prepares updated filing for review by advisor and counsel

Manager

·         Reviews filing and provides comments or approval to file

Fund Counsel

  • Reviews filing and provides comments or approval to file
  • Receives comments (if any) from SEC approximately 45 days after initial filing
  • Updates revised Registration Statement to reflect SEC comments

 

One week to prepare filing, and then 60-day SEC review of filing
Fund Board approval Gemini Fund Services Legal Team

·         Schedules matter for Board consideration during next quarterly Board meeting; an in-person meeting is required for changes to a fund’s 12b-1 plan

·         Prepares updates to fund agreements (12b-1 plan, expense limitation agreement, etc.) and coordinates contract execution after Board approval is obtained

Boards typically meet at least once every three months
Blue Sky registration

 

Gemini Fund Services Treasury Team

·         To add a new share class for existing funds

·         For restructure/reclassification, the team sends notification to Blue Sky vendor for amendment of reclassification

10 business days from effective date
CUSIP and ticker changes

 

Gemini Fund Services Fund Administration Team

·         Submits CUSIP and ticker request

Up to 7 days from Board Approval

 

Option 2 – Restructuring an Existing Share Class

Action Items Fund Partner Timeline
Prepare and file Prospectus supplement or revised Prospectus with the SEC Gemini Fund Services Legal Team

·         Provides brief legal overview

·         Prepares updated filing for review by manager and counsel

Manager

·         Reviews filing and provides comments or approval to file

Fund Counsel

  • Reviews filing and provides comments or approval to file

 

One week to prepare filing, which is effective upon submission to the SEC via EDGAR[1]
Fund Board approval Gemini Fund Services Legal Team

·         Schedules matter for Board consideration during next quarterly Board meeting; an in-person meeting is required for changes to a fund’s 12b-1 plan

·         Prepares updates to fund agreements (12b-1 plan, expense limitation agreement, etc.) and coordinates contract execution after Board approval is obtained

Boards typically meet at least once every three months
Blue Sky registration

 

Gemini Fund Services Treasury Team

·         To add a new share class for existing funds

·         For restructure/reclassification, the team sends notification to Blue Sky vendor for amendment of reclassification

10 business days from effective date
CUSIP and ticker changes

 

Gemini Fund Services Fund Administration Team

·         Submits CUSIP and ticker changes

Up to seven days for ticker changes

Up to two days for CUSIP changes

[1] Board approval may be required before a Prospectus supplement or revised Prospectus can be filed with the SEC.  Gemini’s Legal Team shall consult with fund counsel on a case-by-case basis to determine the appropriate course of action based on the proposed share class changes. 

Additional costs* to consider when starting or restructuring a fund:

·         Outside counsel fees

·         EDGAR filing fees

·         Prospectus changes

·         Printing fees

·         Intermediary distribution fees

·         Outside counsel (provides finalized brief and filing)

·         Intermediary platforms (selling agreement changes)

 

*Some cost may be considered a fund expense.

SUMMARY OF ACTIONS

Action SEC Filing Board Approval Blue Sky Registration Prospectus Changes CUSIP & Ticker Changes Proxy Vote
Create No
Restructure No

7147 GFS-2/13/2017

14
Feb

NEW YEAR, NEW LOOK FOR INSIGHT

The February 2017 Software Update brought with it a number of changes, including a new look for Insight and a slew of new features.

The post NEW YEAR, NEW LOOK FOR INSIGHT appeared first on Orion Advisor Services.

13
Feb

CLS Talks Risk Management With Paladin Consulting (3 of 6)

Paladin Consulting Company’s Co-founder, Art Lutschaunig speaks with CLS’s Senior Market Strategist, Joe Smith, CFA, regarding his view on using smart beta ETFs in factor models and other risk managed strategies.