At this point, if you have not heard of the SEC’s Regulation Best Interest, then you have been under a rock for the past two years. All the writing on this blog about how Reg-BI will affect Broker-Dealers and Registered Investment Advisors has been in lead up to today – June 30th, 2020 – the beginning day of compliance for the new standards.
Today. Did you get that? Don’t even think about making any recommendations or seeing clients if you haven’t reevaluated your processes to be compliant with Reg-BI. It will put you at serious audit risk!
Courts did NOT throw out Reg-BI!
After the Obama administration’s landmark DOL Fiduciary Rule was tossed out by a federal appeals court, some financial professionals expected Reg-BI would fall to a similar fate.
This time that is not the case. Leaving it to the last minute for dramatic effect, a Federal Appeals court upheld Reg-BI despite efforts to vacate the rule. A three-judge panel unanimously determined that the SEC acted properly under the Dodd-Frank financial reform law.
“As of [today, June 30th], whether they choose to work with a broker-dealer or an investment advisor, Main Street investors will be entitled to recommendations and advice in their best interest – the financial professional cannot put its interests ahead of the investor.”
– SEC Chairman Jay Clayton
Don’t be part of the last rush to compliance
As Luke wrote a couple of weeks ago, the SEC will not be sympathetic to businesses that are not compliant due to any COVID-19 shutdown. They are looking for a “good-faith effort” to reach compliance. Nothing more and nothing less.
But a good-faith effort is more than just doing the bare minimum or recommending the cheapest products to your clients.
After all my research I see Reg-BI as really two essential parts:
- Designing new business processes to meet Reg-BI expectations (disclosure, conflict of interest, care, etc.); and
- Proving to the SEC that your firm has made an earnest effort to become compliant.
More information about Regulation Best Interest can be found in our podcast section where you can hear our CEO’s four-part take on Reg-BI and some essential knowledge – from the basics to exams.
Click HERE to download our quick compliance guide.
RiXtrema’s Reg-BI Optimizer is the fastest way to show that your firm has made a good-faith effort to meet the SEC’s new fiduciary standards. Not only was it vetted by a top Fiduciary law firm, but it meets the two essential parts of Reg-BI seamlessly: processes and proof.
The CRS Form Wizard can guide you to quickly build a compliant relationship summary and the recommendations wizard will make sure you ask the required questions and provide all the right information in every client recommendation. Everything you do in the software is monitored by a compliance admin panel, so the software can scale to any size business – from an independent advisory firm to a firm with many agents or brokers.
Click the banner below to see a quick demonstration of how many RIAs and Broker-Dealers are meeting Reg-BI’s requirements for less than a quarter of the SEC’s expected compliance costs.
