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Wednesday, July 1, 2020

How Small RIAs Can Keep Up With Fin Services Corporations

How Small RIAs can keep up with Fin Services Corporations
  1. A Paper-only approach simply won’t cut it
  2. It’s simple: Technology leads to more productivity and more revenue
  3. But don’t buy the robot, just yet
  4. A little Tech with a little free-form
  5. RegBI Optimizer: Tech to grow RIA businesses with Human Flexibility

Large businesses are leaving small firms in the dust by implementing technology to meet Regulation Best Interest’s requirements. With less than a month left, I know that I don’t need to remind you that the June 30th Regulation Best Interest Deadline is fast approaching. How firms prepare for compliance may very well set the course for their growth.

A Paper-only approach simply won’t cut it

It may be tempting to just the SEC has made it clear that they are looking for innovative and creative approaches to compliance. Small changes to client-facing processes and documentation procedures may not be enough to show a “Good-faith effort.”

With the disclosure requirement and the CRS Form, it isn’t enough to just deliver the form to your clients. The SEC wants proof that you did just that and when you did it. So RIAs and BDs must make and keep:

  • true, accurate, and current copies of each delivered form and each revision to the form;
  • a record of the dates that each relationship summary, and each amendment or revision, was given to any client or to any prospective client who subsequently becomes a client.
  • These documents must be accessible and maintained for at least 5 years.

If a business is trying to grow its client base, then the recordkeeping requirements alone are not scaleable in a paper-form.

It’s simple: Technology leads to more productivity and more revenue

Broadridge Financial Solutions surveyed 2,000 RIA and BD firms (mostly dual-registrants) and found a direct link between technology and advisor performance (Figure 1).


Figure 1: The impact of technology on investment advisor performance over the past year and expected in five years

But don’t buy the robot, just yet

Small-businesses have a tighter connection with their clients compared to large RIA companies. Customers expect when they step in the doors of a local RIA that they are talking to a community builder. So, it is essential to have in-person meetings – even after the Pandemic.

As Broadridge Research group found, “Be digital but not digital-only.” Millennials, especially, are more likely to seek a human RIA than a Robo or DIY investing approach, but they may see a paper-based firm as stuck in the past. A hard-line against technology may lead to alienated clients who trade local connections for corporate. That’s a recipe for an early “retirement.”

A little Tech with a little free-form

Figure 2: Most advisors are looking for a recording approach that blends free-form with technology
Figure 2: Most advisors are looking for a recording approach that blends free-form with technology

“Free-form text fields” are areas in a software in which the user (RIA) can type their information, whereas the “pre-determined list of replies” refers to a programmed script. A list of replies can speed up an informational interview and enable the RIA to gather the same required information from every client without

Not all clients need the same service, so RIA and Broker-dealer firms need software that can economize their processes with enough flexibility for the nuance of trustworthy client conversations.

RegBI Optimizer: Tech to grow RIA businesses with Human Flexibility

Vouched for by top ERISA attorneys, it has the hybrid tech blend advisors need. A helpful wizard guides RIAs and BDs and ensures they ask the required Reg-BI questions and disclosures. It also gives them the flexibility to type when needed, and it combines all entries and predefined responses into a seamless document for reporting and recordkeeping. An administration panel lets compliance officers or managers easily supervise RIAs for quality and receive notifications when they forget vital steps.

The SEC is looking for mistakes and lapses in processes in their exams after the June 30th deadline.

Click HERE To learn What the SEC is looking for in their first RegBI Exams

Learn why RIAs and BDs are finding RegBI Optimizer to be an easy solution to their compliance concerns. Click on the banner below to request a short 15-min demonstration. Showing the SEC, you made a good-faith effort to comply with Reg-BI is just a click away.

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