As the implementation date for Regulation Best Interest approaches at the end of this month, firms should be well into prioritizing their preparations using FINRA and SEC guidance to be ready for the focus of initial regulatory reviews, according to industry participants in a SIFMA webinar on compliance with the new rules.
And one of the biggest priorities should be training, panelists stressed; RBC Wealth Management's home offices benefited from the backing of a corporate system and training models, with mandated Reg BI training videos produced for the home offices, according to Lee Thoresen, a senior counsel and head of Regulatory and Transactional at RBC Wealth Management. To date, she said about 30% of advisors had accessed the training resources.
“Everyone is regulation-wary, and we’re having to walk the advisors through another set of regulations that are impacting the way they do business,” she said. “They understand it’s not a choice, and we’re doing the best we can to simplify the process for them.”
According to Joshua Uhl, a senior manager with Deloitte, most of their clients were developing training modules in-house, and while there were more Reg BI tools available from vendors than at the start of the year, Uhl found a lot of it was coming too late for the June 30 deadline.
Additionally, Uhl stressed that advisors needed to find the right tool for helping fulfill their obligations for recommendations, in which advisors must present clients “reasonably available alternatives” to options, in addition to considering cost and the investor’s risk profile. To ensure compliance, advisors will need to document that they considered alternatives; Uhl cited tools from Morningstar and Rightbridge to help, but he stressed the need to make sure these tools didn’t hinder business operations.
“How do you integrate those tools into a seamless workflow, and not make the problem worse by adding a separate system into an advisor’s recommendation process?” he said.
For Thoreson, the final month before implementation has been particularly challenging because of the ongoing dual crises of mass protests and the COVID-19 pandemic, saying she knew staff at home offices were finding it challenging to maintain the right mindset in the midst of the turmoil.
“We have no choice and have to push through, but it’s something to acknowledge and make sure you’re taking care of yourself on the other side of things in getting through to the deadline,” she said.
