Creating a Record Retention Program for Brokerages

A record retention program has many benefits for a business.  First, record retention is a good business practice for a business.  When a program is properly implemented, everyone will know where information should go and how long it will be kept.  It will help the firm eliminate unnecessary storage space, both physical space and disk space on your computer network.

Second, record retention is a valuable risk management tool.  There are legal requirements that require the retention of certain records for a specified periods of time, and so the program will assure compliance with those requirements. It should also make litigation/discovery less expensive.

So, how do you create a document retention program?  First, understand that a record retention policy pertains to “business records”. A business record is something that has operational, legal, fiscal, or historical value to the business.  A business record is not limited to just paper files, but it could be something in any format- a data file, voicemail, or video recording.

Here are the steps for creating a policy:

  1. Assemble record retention team.  Depending on the size of your firm, the number of individuals needed for this will vary- it could be as few as one person.  The record retention team will be responsible for implementing the program and continuing to assure compliance on a regular basis.  An individual familiar with the firm’s electronic record storage policies should be part of the record retention team.
  2. Identify the company’s business records.  The record retention team members will go through the firm’s records and identify those records that have some operational, legal, fiscal, or historical value.
  3. Create a record retention policy. Here, you will need to identify and evaluate any existing policies to determine whether the policies continue to serve the needs of the business.  Legal requirements will establish the time frames for maintaining certain records.  For those records that are not subject to legal requirements, the firm should set policies that best reflect the company’s needs.  Record retention is something that each company needs to create on their own, as there is not a one size fits all policy.  Records that need to be kept for a specific purpose should be retained for as long as needed, while those which are no longer needed can be destroyed.
  4. Legal review. Legal counsel should review since the policy will include records that implicate many different areas of the law such as employment, tax, and state license laws.
  5. Implementation. All paper files and network directories will need to be reviewed and purged of all records that are past the timelines set in the policy. 
  6. Annual compliance review. Once the program is implemented, you should set a schedule for periodic reviews of the policy and also purge records according to the record retention schedule.  If there are multiple record managers, you may want to have the managers provide certifications that they have complied with the policy annually.

Remember, it’s not only important to create the record retention policy, but it’s equally important to make sure that is continued to be followed on a regular basis.