A survey out Tuesday from NES Financial, which handles complex financial accounts through a software-as-a-service (SaaS) offering, shows customers conflicted about how secure their accounts are. The survey of 150 executives in financial services firms or in finance positions at other companies showed 80 percent are confident that the money in these accounts is safe. However, more than 50 percent think there should be more security and transparency about how these accounts are managed.
NES Financial specializes in managing 1031 accounts, referring to the Internal Revenue Service code that regulates them. These accounts allow an individual or corporation to defer their tax liability on certain funds as long as they are held by a "'qualified intermediary," such as NES. These funds could include capital gains on the sale of an office building, an oil rig, heavy equipment or other assets. Other funds NES protects include escrow accounts at title companies or deposits made with a nursing or funeral home.
NES started in 2005 to protect these accounts, which are largely unregulated. "Money was being stolen at a pretty alarming rate," says Michael Halloran, CEO, citing examples of title companies making high-risk investments with escrow funds or funeral homes closing and keeping customer's deposits.
NES initially managed these accounts internally but more recently has begun delivering services using a SaaS model.
Demand for a SaaS-delivered account management solution is expected to grow as regulations evolve to cover these unregulated accounts, Halloran says. The Wall Street Reform and Consumer Protection Act of 2010--also referred to as the Dodd-Frank Act, for its Congressional co-authors--was passed to address the problems that caused the near collapse of the banking system in 2008.