Reg BI Is More than Checklists and Form CRS
Regardless of your advisory model, you’re facing an important challenge. Firms have been gearing for Reg BI for some time now and your clients have ever increasing expectations. Use Reg BI as the catalyst to drive better client communication and implement better technology and processes that ultimately to create higher quality investments for your clients.
Before Reg BI and Form CRS go into effect on June 30, 2020, we’ve found these resources to be quite useful to support your understanding and interpretation:
- FINRA Rules and Guidance – The main page with all the details
- Reg BI and Form CRS Checklist (pdf) – a 28 item checklist that we cover in more detail below
- Full Legislation 17 CFR Parts 200, 240, 249, 275, 279 (pdf) – a 175 page document from the Federal Register 17 CFR Parts 200, 240, 249, 275, and 279
- Instructions to Form CRS (pdf) – the step by step instructions by the SEC on how this form should look and how the language should be written (in ‘plain english’ per this 83 page pdf)
- Form CRS (investor.gov) – a client- friendly source of information with videos and explanations.
What’s Your Level of Readiness?
This important regulation is about showing a standard of care for your clients by educating and sharing information with them about your financial and investment decisions.
Can you favorably answer these questions under the new rule within your client engagement?
- Can you consistently exhibit a reasonable basis that your recommendations are in the best interests of clients?
- Do your policies and procedures, including your investment process, place your client interests first, always?
- When you make a recommendation, have you evaluated all factors including the cost, risk and expense impact not whether the economic impact is good enough?
- Can you demonstrate that your recommendations are aligned with the investment profile of the client?
- Do you have a process for evaluating the rewards, risks and costs of your recommendations and share that information readily and easily?
- Is the full and fair disclosure of the key material facts of your client relationship immediately available?
- What is your system to mitigate conflicts of interests at all times?
- Can you prove and document that you have your clients’ best interests first on every decision?
- Do you share with clients how your decisions and recommendations, whether individually or in its entirety are in their best interests?
Our Focus with You — Care, Monitoring and Documentation
A tool to not only make effective investment decisions but consistently stay in compliance through objectivity and transparency.
Our methodology is to review the portfolio characteristics at the fund or ETF level and avoid considering traditional asset classes, conventional categories or ratings that may contain biases or have been static over long periods of time. Our score provides a precise evaluation of a mutual fund or ETF holding in a head-to-head comparison format that rely on unmatched investment analytics and will consistently demonstrate the alignment of your recommendation with the clients’ best interests.
Whether a prospect or an existing client, you need an answer quickly, consistently and with clarity. If you’re reviewing or demonstrating on a mobile device, a printable document to share with a client or a report to attach to your investment committee minutes, our technology delivers your solution.
Here are some links to other third-party write-ups for Reg BI that we’ve liked and are helpful: