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After a year of ongoing debate and discussion, the Securities and Exchange Commission’s Regulation Best Interest (Reg BI) mandate has now gone into effect. This package of new regulations enacts new standards for broker-dealers and their associates to make sure they are acting in the best interest of investors at the time they issue recommendations.

Many broker-dealers are continuing to educate themselves about Reg BI, and trying to anticipate the impact its rules will have on their firms. As brokers consider what changes to existing operations, processes and workflows they will need to implement in order to comply with Reg BI, they should also look into the legacy technology systems on which their firms run.

A fully integrated, intuitive wealth management or financial planning technology platform that generates operational efficiencies, fosters more meaningful communication and collaboration with clients, and documents broker/client communications can help broker-dealers adapt and meet Reg BI rules — and other new regulations going forward.

Cerulli Associates reported in its U.S. Advisor Metrics report for 2019 that a “lack of process mapping and documentation” is one of the top three challenges to productivity faced by financial services firms. For firms with more than one broker, this is an even bigger problem, with “inconsistent procedures across multiple advisors within the same practice” also listed by Cerulli as a major challenge.

A single digital ecosystem with uniform procedures and process mapping for all brokers within a firm, and a document vault where client-facing presentations and reports outlining recommendations can be easily accessed by both brokers and clients, are key for increasing transparency and ensuring compliance with Reg BI and similar legislation.

Modern wealth management and financial planning platforms can also enable brokers to customize reports for clients to comprehensively document why certain recommendations are in clients’ best interest, based on financial plans and long-term goals. In addition to archiving these reports in document vaults available in client portals, today’s integrated technology stacks can also allow brokers to walk clients through their justification for recommendations — which can include anything from certain types of assets and accounts to hold recommendations on trades — using interactive presentation tools in client portals.

In addition, some digital advice and planning platforms available in the current marketplace offer self-directed workflows, which brokers can harness to begin conversations with clients around more complex retirement and financial planning matters. When clients log in to explore these tools for self-directed investors via links from their broker-dealers, they can securely enter information about their retirement goals as well as basic details about their health and family circumstances. Then, utilizing integrations with providers of smart data, the self-directed workflow portals can predict for clients how much income they would likely need to achieve their goals — as well as meet health care and other expenses — during their retirement.

Brokers can then securely store and archive this information, and use it as the launching pad to discuss planning strategies and recommendations with clients. Follow-up discussions can include the use of digital presentation tools to show clients why the potential strategies and recommendations are in their best interest, based on the information they provided during the self-directed experience as well as other information already incorporated in their existing financial plans.

Automating Data Entry Is Key

Financial planning and the delivery of advice are time-consuming by nature, since they require an in-depth understanding of a client’s financial and life goals, family history, investment preferences, careers and more. A study published by Michael Kitces in 2018 reported that financial advisors allocate about 35 hours on average to the financial process during the first year of a client relationship — and that creating the actual financial plan itself requires an average of almost 15 hours. Furthermore, Capgemini’s 2019 World Wealth Report found that wealth managers spend an average of 20% of their time overall on administrative tasks rather than on those that add value for clients.

Gathering a client’s financial account data at the beginning of the relationship, and the start of the financial planning process, can involve hours of work auditing data entry and transferring documents. Some digital advice and planning platforms offer account aggregation tools that, along with client portals, automate the data entry process, saving brokers time they can spend on client service as well as compliance tasks. The automation of data entry can also reduce the risk of data error across an organization, which is a significant benefit from a compliance perspective.

According to Cerulli’s report, 68% of advisors cited not having enough time to learn and implement new technology as one of the challenges for their practices. However, Cerulli also found that advisors who are proficient and frequent users of technology spent 34% percent less time resolving issues with client service, and had 24% more time to spend purely on practice management activities, which can include compliance tasks.

The arrival of Reg BI, like any significant package of new regulation, is a big moment for the wealth management industry. Fortunately for broker-dealers, some modern digital advice and planning platforms can help them more efficiently document their recommendations and processes, and increase transparency for clients and regulators alike. Today’s technology solutions can also enable broker-dealers to allocate more time to compliance and other practice management tasks going forward.


Angela Pecoraro is CEO of Advicent, the provider of NaviPlan, which supports over 140,000 financial professionals across more than 3,000 firms worldwide.