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Regulation Best Interest - Get Compliance Ready

June 25, 2020

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Key Takeaways

  • Regulation Best Interest (Reg BI) requires financial professionals to put the best interests of retail clients first at all times, adding an extra layer of care and transparency to the advisor-client relationship.
  • Reg BI is built on four obligations: Conflict of Interest, Disclosure, Care, and Compliance.
  • RightCapital supports Reg BI with customized financial plans that document recommendations, secure Vault storage for documents such as Form CRS, and a client portal and mobile app that give clients full, real-time transparency into their plan.

On June 30th expanded Regulation Best Interest (Reg BI) rules take full effect. The regulation is designed to provide an additional layer of care and concern for ‘retail customers’ of financial professionals. More simply put, the best interests of the client must come first at all times.

But what does this really mean? Let’s take a quick look at the direct impact Reg BI has on your practice.

Reg BI – The Four Obligations^

In order to adhere to SEC regulations and remain Reg BI compliant, you must follow these four obligations:

Conflict of Interest Obligation

  • A broker dealer must establish, maintain, and enforce reasonably designed policies and procedures to identify or eliminate all conflicts of interest, specifically monetary incentives, associated with a recommendation.

Disclosure Obligation

  • The broker dealer must provide the retail customer in writing, full and fair disclosure of all material facts relating to the scope and terms of the relationship with the retail customer and all material facts relating to conflicts of interest that are associated with the recommendation.

Care Obligation

  • A broker dealer must understand the risks and rewards of a recommendation, have a reasonable basis to believe the recommendation is in the best interest of the client, and does not place the interest of the broker dealer before the client.

Compliance Obligation

  • The firm must establish, maintain and enforce written policies and procedures that are reasonably designed to achieve compliance with Regulation Best Interest.

RightCapital Tools that Support Reg BI

The right tools make Reg BI compliance a breeze. And RightCapital Financial Planning Software offers many features to help you adhere to the new regulations.

Financial Planning Dashboard

  • Create customized plans within RightCapital that support your recommendations and highlight your value as a trusted advisor. Your clients have 24/7 access to their dashboard and will be able to view the financial impact of your recommendations in real-time.

Vault Storage

  • Our online Vault allows you to safely and securely share and store documents, such as Form CRS (Client Relationship Summary), with your clients. Any document needed for processing, meeting, or long-term storage can be contained in the Vault safely.

Client Portal & Mobile App

  • The client portal is a trust-building tool you can use to deepen your existing client relationships. Your clients will have access to their financial plans anytime, anywhere with our client portal and native mobile app allowing them full transparency into your financial recommendations.

RightCapital Financial Planning Software + Regulation Best Interest

If you are looking for the right tools to help you stay Reg BI compliant, RightCapital Financial Planning Software can help.

Our main objective has always been to help financial professionals do more planning in less time with our easy-to-use and flexible interface. And now we can also help you remain Reg BI compliant.


^Source: https://www.sec.gov/regulation-best-interest

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Frequently asked questions

Regulation Best Interest is an SEC rule that requires broker-dealers to act in the best interest of their retail customers when making recommendations. It's designed to add a layer of care and transparency, ensuring the client's interests come before the firm's.

Reg BI is built on four obligations: the Conflict of Interest Obligation (identify and address conflicts), the Disclosure Obligation (provide full written disclosure of material facts), the Care Obligation (have a reasonable basis that a recommendation is in the client's best interest), and the Compliance Obligation (maintain written policies and procedures to achieve compliance).

Form CRS (Client Relationship Summary) is a disclosure document that summarizes a firm's relationship with retail clients, including services, fees, conflicts of interest, and standards of conduct. Advisors can store and securely share it with clients, for example, through a document vault.

RightCapital supports Reg BI compliance with customized financial plans that document and support recommendations, secure Vault storage for sharing documents like Form CRS, and a client portal and mobile app that give clients 24/7 transparency into their plan and the financial impact of an advisor's recommendations.

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