(Washington)

A whole squad of industry players are trying to stop the SEC’s new Reg BI in its tracks. From individual firms (like Michael Kitces’) to trade groups, many are filing lawsuits to stop the implementation of Reg BI. One of the critical arguments seems to be that the new Reg BI does not sufficiently protect investors under the rules of the Dodd-Frank Act. One principal at XY Planning Network says, simply, “Reg BI makes it more difficult for customers to differentiate between financial planners who are bound by fiduciary obligations and for broker-dealers who may consider their own financial interests”.

FINSUM: Both broker-dealers and RIAs are against this rule. For the former, it complicates life, and for the latter, it muddles some of their “fiduciary” thunder. Nonetheless, it seems the rule is likely to implemented on schedule.

(New York)

If you survey advisors—which many have done—they will tell you that the hardest part of the forthcoming Reg BI rule from the SEC is how to handle all the requirements of the new Customer Relationship Summary form (Form CRS). With that in mind, Pershing has just launched an interesting new end-to-end Form CRS product that helps advisors comply with the rule, as well as a Tracking and Reporting Solution. According to Pershing, “We recognize that account opening is not the only [thing used], so we’ve rolled out a new forms management system where the CRS can be directed and stored digitally, and married that system with a number of trigger points that require the delivery of a Form CRS … We’ve given our clients the opportunity to both deliver forms in paper where it’s still necessary, or digitally to the extent that the investor has opted into electronic delivery”.

FINSUM: Compliance with Form CRS is a challenge, and one that is being exacerbated by COVID and people working from home. This sounds like a great solution.

(Washington)

Smaller broker-dealers around the nation are grossly underprepared for the forthcoming Regulation Best Interest. In early April, the SEC decided not to extend the implementation date of the rule because of COVID, which means all firms will need to be ready by June 30th. However, most small broker-dealers are so focused just trying to stay in business, that most are delaying any actions that will help help for the rule. The SEC has said it will take circumstances into account when enforcing the rule.

FINSUM: One of the big issues besides COVID, is that there is a high degree of complacency about the new rule because many think “I prepared for the DOL rule, so we should be covered for this”. However, there are some important distinctions with this rule (e.g. retail investor vs retail customer), and many could find themselves in hot water.