Understanding NIGOs: Why They’re Costing Your Firm (And How to Reduce Them)

Precision is paramount when handling finances. As such, in financial services even minor paperwork errors can have significant consequences. Not In Good Order (NIGO) documents refer to any paperwork that is incomplete or contains errors, which can delay account openings and asset transfers, creating additional work and frustrating clients. These errors not only waste time but also increase costs and potentially damage your firm's reputation.

NIGOs aren't just a minor inconvenience—they can lead to lost business and unhappy clients. Reducing NIGOs is crucial for keeping operations smooth and ensuring client satisfaction. This article explores why NIGOs occur and offers practical strategies to eliminate them. We'll also discuss how using advanced tools like Investipal can streamline processes and improve efficiency, allowing you to focus on serving your clients effectively.

Understanding the Costs and Implications of NIGOs

NIGOs, or Not In Good Order documents, are more than just administrative hurdles—they can significantly impact your business in several ways.

Operational Delays

• Process Inefficiencies: When documents are incomplete or incorrect, they need to be corrected and resubmitted, which delays critical processes like account openings and asset transfers. These delays can create bottlenecks, causing disruptions in your workflow and affecting your ability to deliver timely services.
• Resource Diversion: Staff must spend valuable time correcting errors instead of focusing on strategic tasks like advising clients or pursuing growth opportunities. This diversion of resources can reduce overall productivity and affect morale.

Financial Impact

• Increased Costs: Each NIGO represents additional administrative work, which increases operational costs. This includes the need for overtime pay, additional training, and resources to handle rework. Industry studies show that processing a NIGO can cost twice as much as a correctly submitted document.
• Lost Business Opportunities: Time spent addressing NIGOs is time not spent on business development or enhancing client relationships. This can limit your firm’s growth potential and reduce your competitive edge.

Client Trust and Satisfaction

• Frustration and Erosion of Trust: Clients expect smooth and timely service. Delays and errors can lead to frustration, causing clients to question the reliability of your services. This erosion of trust can make it harder to maintain strong client relationships.
• Client Attrition: If clients experience repeated issues due to NIGOs, they might choose to take their business elsewhere. Losing clients not only impacts revenue but can also damage your reputation in the industry.

Compliance Risks

• Regulatory Scrutiny: Frequent documentation errors can attract the attention of regulators, who may scrutinize your firm’s practices more closely. This can lead to audits and additional oversight, consuming more time and resources.
• Fines and Penalties: Non-compliance resulting from NIGO issues can lead to financial penalties, further increasing costs and harming your firm’s financial health. Ensuring compliance is essential to avoid these risks and ensure your firm operates within legal boundaries.

Understanding these implications allows you to strategize effectively to minimize errors and enhance service delivery.

Common Examples of NIGOs

NIGOs are prevalent in financial transactions, causing delays and inefficiencies. Here are some common issues that lead to NIGOs:

New Account Openings

• Missing Signatures: Essential signatures from clients or advisors are often overlooked, causing delays. Implementing e-signature solutions like Docusign ensures that documents are signed before submission.
• Incomplete Information: Forms lacking necessary identification or contact details frequently get rejected. Using digital forms that require all fields to be completed before submission can help mitigate this issue.
• Incorrect Data Entry: Errors like mistyped Social Security numbers or account details result in document rejections. Automated data entry systems can help catch these errors early.

Mass Transfers and Migrations

• Inaccurate Data Extraction: Mistakes in extracting holdings from brokerage statements or ACATs forms can cause significant delays. Leveraging OCR technology can reduce errors by accurately capturing data from these documents.
• Inconsistent Data Formats: Discrepancies in data entry, such as inconsistent date formats, can lead to processing errors. Standardizing data entry formats across systems can minimize these issues.
• Wrong Account Details: Incorrect account numbers or beneficiary information often result in failed transfers. Double-checking data before submission and using verification tools can help avoid these errors.

Understanding the impact of carrier-specific requirements on NIGO rates is crucial. Different carriers have unique requirements, and creating standardized checklists for each can help streamline submissions and reduce errors.

Strategies for Reducing NIGOs

Reducing NIGOs is essential for improving operational efficiency and maintaining client satisfaction. Here are effective strategies to minimize these errors:

Adopt Digital Solutions

• Streamline Document Processing: Digital platforms ensure that all required fields are completed before submission, reducing the chance of missing information. According to Schwab, digital onboarding can reduce errors from 31% to 4%.
• E-signatures and Digital Document Management: Using electronic signatures and managing documents digitally ensures that signatures aren't missed and that all necessary documents are properly filed and accessible.

Implement Automation

• Automated Data Verification: Automating data entry and verification processes helps catch errors early, reducing the need for manual corrections. Automated systems can also highlight discrepancies that require attention.
• Pre-Submission Checks: Technologies that provide real-time validation can identify discrepancies before documents are submitted, preventing NIGOs from occurring. Implementing these checks as part of the submission process can dramatically reduce errors.

Leverage OSJ Support

• Oversight and Training: Offices of Supervisory Jurisdiction (OSJ) can review documentation for accuracy and completeness before submission, reducing errors. They also provide ongoing training to ensure staff are up-to-date on best practices and compliance requirements.

Continuous Training

• Staff Education: Regular training on compliance requirements and documentation best practices is crucial. Well-informed staff are less likely to make errors that lead to NIGOs. Implementing structured training programs and feedback sessions can significantly reduce errors.

Using Client Feedback

• Feedback Loops: Incorporating client feedback after NIGO incidents can provide valuable insights into areas for improvement. Establishing a feedback loop where clients can report their experiences helps advisors refine their processes.

Leveraging Technology to Minimize NIGOs

Technology plays a crucial role in reducing NIGOs by streamlining processes and enhancing accuracy. Here are some ways to leverage technology to minimize these errors:

Automated Data Extraction

• Optical Character Recognition (OCR): Automate the extraction of data from forms and statements, reducing manual entry errors and ensuring accuracy. This is particularly useful in minimizing errors during account transfers.

• Real-Time Data Validation: Implement tools that validate data during entry, catching errors immediately. These systems can alert staff to potential issues before submission, reducing the risk of NIGOs.

Digital Platforms

• Comprehensive Digital Solutions: Use integrated platforms that streamline client interactions, from onboarding to asset transfers. These platforms reduce the risk of NIGOs by ensuring all steps are completed correctly and consistently.
• Workflow Management: Utilize workflow management tools to track document progress, identify bottlenecks, and ensure timely completion of all tasks. These tools provide transparency and accountability, helping advisors manage workflows more effectively.

Managing Client Expectations

• Setting clear expectations with clients about the potential for NIGOs and the steps being taken to minimize them can help manage perceptions and maintain trust. Informing clients upfront about possible follow-ups or additional documentation can prevent misunderstandings and foster a more collaborative relationship.

By incorporating client feedback into processes, financial advisors can further refine their methods to prevent future NIGOs, enhancing both operational efficiency and client satisfaction.

Reducing NIGOs with Investipal

Investipal offers a comprehensive suite of tools designed to address the common challenges associated with NIGOs. With features like automated data extraction through OCR, real-time data validation, and compliance document generation, Investipal helps financial advisors streamline their operations and minimize errors. That means lower costs, faster processes, and happier clients. Interested in learning more? Book a demo today.