A Financial and Operations Principal—commonly called a FINOP—helps a broker-dealer meet its financial responsibility, reporting and recordkeeping obligations. An outsourced FINOP performs that function as an external professional while working closely with the firm’s management, accounting, operations and compliance personnel.
Core responsibilities
The work normally begins with understanding the broker-dealer’s business model, revenue streams, clearing arrangements, ownership, counterparties and regulatory permissions. That context drives the firm’s accounting, reporting and net-capital considerations.
- Monitoring net capital and aggregate indebtedness
- Preparing or reviewing FOCUS and supplemental filings
- Overseeing financial books and records
- Coordinating annual audits and regulatory examinations
- Evaluating distributions, capital contributions and material transactions
- Helping management identify financial issues early
Why firms outsource the role
Outsourcing can provide experienced Series 27 leadership without the cost and organizational demands of a comparable full-time position. It can also give a firm access to a broader team when unusual transactions, regulatory questions or staffing gaps arise.
What a strong relationship looks like
An effective FINOP relationship extends beyond preparing calculations and filing forms. The FINOP should understand the activity behind the numbers, communicate clearly with management and help the firm anticipate how business decisions may affect its financial and regulatory position.