The Challenge

When Mid Atlantic Capital Group first began issuing a FICCA audit report to mutual fund partners, they were ahead of the game.  So far ahead, in fact, that detailed feedback and knowledge of FICCA best practices were scarce.

That’s where NQR came in, said Michele Coletti, COO of Trust & Custody at Mid Atlantic.  NQR works with fund companies to review FICCA and SOC reports submitted by distribution intermediaries like Mid Atlantic.

“NQR reached out to explain to us how they service funds, which led to a great dialogue about how exactly they review audit reports from firms like us,” Coletti said.  “Feedback is important. If we don’t know how we’re measured, we can’t improve the quality of our reports.”

The two companies continued to talk, and Coletti grew more interested in a working relationship that would benefit NQR, Mid Atlantic, and – most importantly – their shared client base.

The proposed plan was simple: instead of NQR fund clients individually requesting Mid Atlantic’s audit reports each year, Mid Atlantic would send reports directly to NQR.  Once received, NQR would provide Mid Atlantic with a full review of the reports – the same review that funds receive.

But before agreeing to a partnership, Mid Atlantic had to do their research.  The first step was a green light from Mid Atlantic’s “Big Four” external auditor.  Next came conversations with fund partners and a peek at NQR’s client list.  “We vetted NQR quite seriously,” Coletti said.  “Once we realized they work with several large funds that have robust compliance procedures, we became comfortable and confident in a relationship.”

The Solution

From the outset, NQR was able to shine a light on best practices and how Mid Atlantic’s fund partners interpret and evaluate the results of NQR’s audit report review.

“NQR knows they’re speaking on behalf of the funds, and they were very proactive in coming to us,” Coletti said.  “At first we were unclear on how their scoring matrix worked and their areas of focus, but NQR was able to explain everything.”

NQR’s feedback has indeed led to several changes in how Mid Atlantic incorporates and organizes report content.

“As it turned out, there were some things we were doing from an operational and compliance standpoint that hadn’t initially made it into the SOC or FICCA,” Coletti said.  “But NQR let us know these points mattered to fund companies.”

The Results

The partnership with NQR has enabled Mid Atlantic to realize a number of benefits.

Reduced overhead is one topline result.  Coletti says it’s more efficient to distribute reports and answer follow-up questions through NQR.  “It’s a tremendous amount of work to deal with each fund one-on-one.  Working only with NQR on behalf of the funds they service is very helpful.”

Improved quality of Mid Atlantic’s FICCA report is another outcome.  “The first couple of years issuing a FICCA were stressful.  We wondered if our report was adequate and how funds would receive it.  It was a lot of work to get those reports out,” Coletti said.  “Now, we’re getting to a place where it’s a normal thing to issue the FICCA.  It’s nice to have a vendor like NQR, and they’re a vendor to the funds – not even to us!”

Overall, NQR’s ability to provide context and insight into Mid Atlantic’s audit reports has streamlined a number of due diligence interactions.

“Having NQR involved resolves lots of pain points in terms of direct servicing of funds,” Coletti said.  “Their experts provide funds with standardized report reviews, allowing us to focus our relationship with the funds on business, rather than granular compliance, which helps everyone.”

As for the future, Coletti is confident the partnership with NQR will continue to work for both sides.  “NQR is extremely approachable, accommodating, and quick to answer any questions,” she said.  “We’re very comfortable with our relationship and where it’s headed.”

About Michele A. Coletti, CEBS, QKA

Michele Coletti joined Mid Atlantic in 2008 and serves as Group Chief Operating Officer, Trust & Custody.  She has over 25 years of experience in the retirement plan industry in various roles encompassing the recordkeeping, compliance, and trading of qualified and non-qualified plans.

In her role, she spearheads new solutions for Mid Atlantic’s open architecture platform providing custody and clearing support to intermediary partners and outside dealers.  Ms. Coletti also manages the Mutual Fund Services team responsible for negotiation of mutual fund selling and servicing agreements, fee and commission invoicing and collection, dealer compensation solutions, and fund compliance.  In 2017, Michele assumed oversight duties of Mid Atlantic’s enterprise risk management functions and also the recently formed Home Office Services division, which provides a variety of compliance and processing-based solutions, primarily to the large broker-dealer marketplace.

Prior to joining Mid Atlantic, Ms. Coletti spent 13 years with SunGard managing key vendor relationships and initiatives.  She is a member of the Investment Company Institute’s Bank, Trust, and Recordkeeping Advisory Committee (BTRAC).  A summa cum laude graduate of St. Bonaventure University, Ms. Coletti also holds the Certified Employee Benefit Specialist (CEBS) designation from IFEBP and the Wharton School, as well as the Qualified 401(k) Administrator designation (QKA) from the American Retirement Association (ASPPA).

About Mid Atlantic Capital Group

Mid Atlantic Capital Group is a leading financial services organization that provides a wide array of brokerage, advisory, and trust services to a diverse national client base of financial advisors and institutions, asset managers, and benefits administrators through its various subsidiary companies.

For more information, please visit www.macg.com.