{"id":5634,"date":"2019-10-31T16:16:46","date_gmt":"2019-10-31T21:16:46","guid":{"rendered":"https:\/\/rixtrema.com\/blog\/?p=5634"},"modified":"2020-06-22T13:02:23","modified_gmt":"2020-06-22T18:02:23","slug":"reg-bi-is-along-the-line-of-fiduciary-rule","status":"publish","type":"post","link":"https:\/\/rixtrema.com\/blog\/reg-bi-is-along-the-line-of-fiduciary-rule\/","title":{"rendered":"Hidden opportunities in the Reg BI"},"content":{"rendered":"\n<ol class=\"wp-block-list\"><li><strong><a href=\"#one\">Key elements of the Reg BI<\/a><\/strong><\/li><li><a href=\"#two\"><strong>Adopt a financial literacy focus<\/strong>\u00a0<\/a>\u00a0<\/li><li><strong><strong><a href=\"#three\">Simple solutions sell<\/a><\/strong><\/strong><\/li><\/ol>\n\n\n<p style=\"text-align: justify;\"><a href=\"https:\/\/rixtrema.com\/blog\/financial-advisors-can-still-be-advisors-in-the-free-trade-platform\/\"><span style=\"font-weight: 400;\">Free trading<\/span><\/a><span style=\"font-weight: 400;\">, <\/span><a href=\"https:\/\/rixtrema.com\/blog\/marketing-to-millennials\/\"><span style=\"font-weight: 400;\">differences in generational marketing<\/span><\/a><span style=\"font-weight: 400;\">, and <\/span><a href=\"https:\/\/rixtrema.com\/blog\/recession-deja-vu-no-smoke-without-fire\/\"><span style=\"font-weight: 400;\">economic challenges<\/span><\/a><span style=\"font-weight: 400;\"> are significantly changing the Financial Services Industry. Despite the original Fiduciary Rule being struck down last year, the Regulation Best Interest (Reg-BI) is making the roles and responsibilities of financial services professionals more dynamic and evolved than ever. In short, Reg-BI replaces the Suitability Standard and expands upon it similarly to the Fiduciary Rule. Now financial professionals can only make recommendations that serve the client first and must take action to maintain fiduciary due diligence.\u00a0<\/span><\/p>\n<h2><b><a id=\"one\"><\/a>Key elements of the Reg BI<\/b><\/h2>\n<ul style=\"text-align: justify; list-style-type: disc;\">\n<li style=\"text-align: justify;\"><b>Disclosure Requirement: <span style=\"font-weight: 400;\">brokers-dealers must disclose facts about their recommendations and their relationship to the products.\u00a0<\/span><\/b><\/li>\n<\/ul>\n<ul style=\"list-style-type: disc; text-align: justify;\">\n<li><strong>Obligation to client care:<\/strong><span style=\"font-weight: 400;\"> broker-dealers must use reasonable due diligence when making investment recommendations. In other words, they understanding the risks, rewards, and costs associated with the idea and inform the client.\u00a0<\/span><\/li>\n<\/ul>\n<ul style=\"list-style-type: disc; text-align: justify;\">\n<li><strong>Avoiding Conflict-of-Interest:<\/strong> <span style=\"font-weight: 400;\">establish, maintain, and enforce written policies and procedures to identify and disclose or eliminate conflicts of interest.\u00a0<\/span><\/li>\n<\/ul>\n<ul style=\"text-align: justify;\">\n<li style=\"list-style-type: none;\">\n<ul>\n<li style=\"list-style-type: none;\">\n<ul style=\"list-style-type: circle;\">\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Correct conflicts that create an incentive for the firm\u2019s broker-dealers to put the client second.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Expand the menu of offerings away from offering only proprietary products.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Eliminate time-period sales incentives that are based on the sale of specific investment products.\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ul style=\"text-align: justify;\">\n<li style=\"text-align: justify;\"><b>Compliance Obligation: <span style=\"font-weight: 400;\">broker-dealers must establish and enforce these policies and procedures.\u00a0<\/span><\/b><\/li>\n<\/ul>\n<h2 id=\"h_17630124461592847800503\" style=\"text-align: justify;\"><b><a id=\"two\"><\/a>Adopt a financial literacy focus<\/b><span style=\"font-weight: 400;\"><a href=\"#h_17630124461592847800503\">\u00a0<\/a>\u00a0<\/span><\/h2>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">In essence, the Reg-Bi is a regulation that forces advisors to give the service they\u2019re meant to provide. By highlighting your firm\u2019s history of meeting fiduciary standards, you may be able to attract retail investors or plan sponsors who are aware of the Department of Labor regulations and may be suspicious of financial advisors. Educating the most economically disadvantaged may make you an attractive fiduciary and aware of a client\u2019s personal financial challenges. <\/span><a href=\"https:\/\/rixtrema.com\/blog\/how-advisors-can-help-next-gen-clients\/\"><span style=\"font-weight: 400;\">Millennial investors are already more willing to see a financial professional in person<\/span><\/a><span style=\"font-weight: 400;\"> and could be viable prospects if you market your services with a financial education tone rather than with traditional sales strategies.<\/span><\/p>\n<blockquote>\n<p><span style=\"font-weight: 400;\">There\u2019s a reason why the menu at a fine dining restaurant is one clean page or carved into a piece of driftwood &#8211; too many options and customers begin to think that the quality is diminished in favor of many options.<\/span><\/p>\n<\/blockquote>\n<h2 id=\"h_8856561781592847813386\" style=\"text-align: justify;\"><b><a id=\"three\"><\/a>Simple solutions sell.\u00a0<\/b><\/h2>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">Especially with a shift towards financial education, advisors and broker-sellers may see many benefits to reducing the number of products they offer to clients. Not only will offering tailored investment ideas make meetings easier for advisors to prepare and clients to understand, but the real opportunity comes when advisors shift towards more personalized investment ideas rather than simply offer a smaller selection. <\/span><a href=\"http:\/\/www.millennialmarketing.com\/who-are-millennials\/\"><span style=\"font-weight: 400;\">40% of millennials<\/span><\/a><span style=\"font-weight: 400;\"> will pay more for a product that aligns with their values and <\/span><a href=\"https:\/\/www.investmentnews.com\/article\/20190725\/FREE\/190729956\/pacific-life-shutters-esg-robo-adviser-swell-investing\"><span style=\"font-weight: 400;\">half prefer<\/span><\/a><span style=\"font-weight: 400;\"> to see their financial advisor or broker in person. So, <\/span><a href=\"https:\/\/rixtrema.com\/blog\/are-you-capitalizing-on-growing-esg-popularity\/\"><span style=\"font-weight: 400;\">adopting a menu of ESG or SRI investment options<\/span><\/a><span style=\"font-weight: 400;\"> could meet the Reg-BI obligation and give you a competitive advantage over most advisors who neglect these clients.\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">Offering a more personalized service with an awareness of a client\u2019s demographic-economic challenges may be an opportunity to build lasting and trustworthy relationships with clients. Depending on your recommendations and market, there could be advantages to carving out a niche business to serve specific client demographics. We wrote previously about the need for financial advisors to measure <\/span><a href=\"https:\/\/rixtrema.com\/blog\/case-study-risk-capacity\/\"><span style=\"font-weight: 400;\">risk capacity in addition to risk tolerance<\/span><\/a><span style=\"font-weight: 400;\">, and that is just one tool to assess the client\u2019s unique financial situation. An automatic <\/span><a href=\"https:\/\/rixtrema.com\/blog\/case-study-heres-why-your-risk-tolerance-questionnaire-is-failing-you\/\"><span style=\"font-weight: 400;\">risk questionnaire<\/span><\/a><span style=\"font-weight: 400;\"> and streamlined <\/span><a href=\"https:\/\/rixtrema.com\/blog\/what-does-it-mean-to-become-a-successful-digital-marketing-fiduciary\/\"><span style=\"font-weight: 400;\">email marketing campaign<\/span><\/a><span style=\"font-weight: 400;\"> could mean adaptations to Reg-BI may lead to efficiency and better service to more clients.\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">If most advisors will meet Reg-BI and continue with business as usual, then why does the industry need the regulation? Well, the financial advisors who value sales quantity over the quality of service will struggle to change their workflow while small firms are more nimble than major brick-and-mortar businesses. Just as many expected the industry to change after the Fiduciary Rule, the introduction of Reg-BI may fundamentally change the tone and type of relationship between client and broker-seller; for the better. Financial advisors who got into the industry to spread financial knowledge and help responsibly build wealth for their clients will prosper as they genuinely exceed the new regulatory standards.\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">Forgive the self-indorsement, but Rixtrema\u2019s financial planning software allows financial advisors to <\/span><a href=\"https:\/\/rixtrema.com\/blog\/pct-pro-using-retirerisk-to-plan-cashflow-in-retirement\/\"><span style=\"font-weight: 400;\">model the unique retirement situation<\/span><\/a><span style=\"font-weight: 400;\"> and provide personalized service. Many of our marketing products can help to easily shift a firm\u2019s marketing efforts and increase outreach. We follow and write about the most recent market and industry news and provide tutorials of our financial planning software platform at our <\/span><a href=\"https:\/\/rixtrema.com\/blog\/\"><span style=\"font-weight: 400;\">blog<\/span><\/a><span style=\"font-weight: 400;\">. There you can also read about each product\u2019s features, especially Larkspur Executive\u2019s new marketing feature, <\/span><a href=\"https:\/\/rixtrema.com\/blog\/how-retirement-advisors-can-easily-send-marketing-letters-to-prospects\/\"><span style=\"font-weight: 400;\">Customized Trackable Marketing Letters<\/span><\/a><span style=\"font-weight: 400;\">, which can be deployed to streamline your marketing efforts. Feel free to contact our Client Success Team at <\/span><a href=\"mailto:clientsuccess@rixtrema.com\"><span style=\"font-weight: 400;\">clientsuccess@rixtrema.com<\/span><\/a><span style=\"font-weight: 400;\"> to learn more about our products or articles.<\/span><\/p>\n<p style=\"text-align: justify;\">\u00a0<\/p>\n\n\n<figure class=\"wp-block-image size-large\"><a href=\"https:\/\/rixtrema.net\/regbioptimizer\/index?source=Colin-31-10-19\" target=\"_blank\" rel=\"noopener noreferrer\"><img loading=\"lazy\" decoding=\"async\" width=\"542\" height=\"100\" src=\"https:\/\/rixtrema.com\/blog\/wp-content\/uploads\/2020\/05\/REGBIOPTIMIZER1.png\" alt=\"regulation best interest software\" class=\"wp-image-6468\" srcset=\"https:\/\/rixtrema.com\/blog\/wp-content\/uploads\/2020\/05\/REGBIOPTIMIZER1.png 542w, https:\/\/rixtrema.com\/blog\/wp-content\/uploads\/2020\/05\/REGBIOPTIMIZER1-300x55.png 300w, https:\/\/rixtrema.com\/blog\/wp-content\/uploads\/2020\/05\/REGBIOPTIMIZER1-500x92.png 500w\" sizes=\"auto, (max-width: 542px) 100vw, 542px\" \/><\/a><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>Key elements of the Reg BI Adopt a financial literacy focus\u00a0\u00a0 Simple solutions sell Free trading, differences in generational marketing, and economic challenges are significantly changing the Financial Services Industry. Despite the original Fiduciary Rule being struck down last year, the Regulation Best Interest (Reg-BI) is making the roles and responsibilities of financial services professionals&#8230; <\/p>\n<div class=\"clear\"><\/div>\n<p><a href=\"https:\/\/rixtrema.com\/blog\/reg-bi-is-along-the-line-of-fiduciary-rule\/\" class=\"excerpt-read-more newsstand-button\">Read More<\/a><\/p>\n","protected":false},"author":9,"featured_media":5635,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[168],"tags":[1810,257,1808,1809,276,277,27],"class_list":["post-5634","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-conflict-of-interest","tag-esg","tag-free-trading","tag-obligation","tag-reg-bi","tag-regulation-best-interest","tag-rixtrema"],"jetpack_featured_media_url":"https:\/\/rixtrema.com\/blog\/wp-content\/uploads\/2019\/10\/-\u0438\u043c\u0435\u043d\u0438-1-e1592847981499.png","yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v15.9.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Hidden opportunities in the Reg BI<\/title>\n<meta name=\"description\" content=\"Free trading, differences in generational marketing, and economic challenges are significantly changing the Financial Services Industry. Despite the original Fiduciary Rule being struck down last year, the Regulation Best Interest (Reg-BI) is making the roles and responsibilities of financial services professionals more dynamic and evolved than ever. In short, Reg-BI replaces the Suitability Standard and expands upon it similarly to the Fiduciary Rule. Now financial professionals can only make recommendations that serve the client first and must take action to maintain fiduciary due diligence.\u00a0\" \/>\n<link rel=\"canonical\" href=\"https:\/\/rixtrema.com\/blog\/reg-bi-is-along-the-line-of-fiduciary-rule\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Hidden opportunities in the Reg BI\" \/>\n<meta property=\"og:description\" content=\"Free trading, differences in generational marketing, and economic challenges are significantly changing the Financial Services Industry. Despite the original Fiduciary Rule being struck down last year, the Regulation Best Interest (Reg-BI) is making the roles and responsibilities of financial services professionals more dynamic and evolved than ever. In short, Reg-BI replaces the Suitability Standard and expands upon it similarly to the Fiduciary Rule. 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