On January 16, SIFMA hosted its Regulation Best Interest Vendor Forum at its conference center in New York. The Forum was sold out and demand was so high the event was live streamed as well.
The purpose of the forum was for technology vendors to highlight technology solutions and/or service offerings to assist firms to comply with the Regulation Best Interest (RegBI) requirements, which go into effect in mere months (July 1, 2020). Even with the deadline looming, regulatory guidance is still emerging; the SEC published an updated FAQ on RegBI on the Monday before the conference.
Consulting firms, technology vendors and others all shared their ideas on how to address RegBI compliance and accelerate implementation. The Forum also offered 3 panels of experts to discuss various aspects of RegBI. Topics ranged from measuring the business impact of RegBI, to analyzing various duty and disclosure requirements, to potential changes to supervision and surveillance practices. I was fortunate enough to participate in the afternoon panel entitled “RegBI Compliance from Front to Back,” where the panel focused on the duty of care and delivery of Form CRS in more detail. At our booth, we showed attendees a demo of how the delivery of Form CRS could be automated using Hearsay Relate, through integration with a CRM system.
The general sentiment of the Forum was that firms have to be realistic when implementing RegBI compliance programs, given the rapidly approaching July 1st deadline. While everyone wants a single end-to-end system, the scope of RegBI is too large to be completely outsourced. There was acknowledgement that the best approach is to evaluate how to make solutions modular. On people’s minds: Would there be an opportunity for systems to integrate or link into one another so that, even if there was no single system to manage RegBI compliance, a firm could implement a single RegBI workstream program that could be implemented across many different systems?
With this in mind, panels at the conference discussed how project plans to address RegBI have been conventionally split into two different implementation tracks: so called “Day 1 Implementation,” consisting of absolutely critical compliance requirements that must be in place by July 1st, and “Day 2 Implementation,” consisting of automating and scaling the program to complement other compliance workstreams. Day 1 activities included items such as expanded training programs for impacted individuals, policy reviews, and current advertising audits (including advertising lexicon reviews). Day 2 activities discussed were things such as CRM integration and the ability to automate review processes and other similar workflows.
Firms were challenged to view Day 1 activities vs Day 2 activities from three perspectives: monetary cost, time cost and opportunity cost. With limited budgets, firms should look internally to existing solutions and determine their capabilities to solve parts of the RegBI problem rather than finding net new solutions. Firms should also be mindful of IT and other resource constraints on time. For example, what is the best use of personnel time in achieving compliance and is there a way to naturally pair Day 1 time with Day 2 roadmaps? And given this limited amount of time, firms need to be mindful that the opportunities chosen provide the most value.
The conversations and discussions at the forum were very lively and honest. RegBI compliance is a serious challenge that requires thoughtfulness, flexibility and, most importantly, efficiency. If you are interested in learning more about how Hearsay can assist with your firm’s RegBI compliance project plan, take a look at this previous blog post I wrote or please contact your customer success manager.