In the short run, there are immediate benefits in engaging clients and prospects in a dialog around what “Best Interest” means to them. And, what better time could there be to communicate a firm’s revitalized commitment to its clients than in the middle of a pandemic? Firms are telling us that even a simple series of messages that detail “how we’re on your side” is finding a welcome reception among bone-weary, isolated clients.
After five years of following the news reports surrounding the search for a Best Interest standard, clients know that the new rule opens the door to a better wealth management experience. A recent Broadridge survey1 of 1000 North American investors just established that fact. When asked, “How important is it to you that your advisor acts as a fiduciary?” 94% of respondents agreed it was “important” – regardless of gender or generational cohort.
Reg BI as a business development strategy
Over the long run, Reg BI provides a catalyst for creating a culture of values that deepens relationships and encompasses more of a client’s needs. While not a fiduciary standard itself, Reg BI’s obligations narrow the gap between baseline standards between non-fiduciary and fiduciary advice.
During Broadridge’s on-demand Reg BI Day 2 Webinar2, I shared insights from a recent BRCS Wealth Management Survey of 80 industry and client interviews that revealed how Reg BI has the potential for motivating firms to explore their business mission in new ways:
- Accelerating their digital transformation: The combination of introducing Reg BI and establishing pandemic-driven interactive communications are pressing firms to pick up their pace of adoption. One firm expressed an opinion shared by others: “We’re finding out we have to learn how to perform in three months what we were planning to accomplish over the next two years.”
- Prioritizing a holistic practice: Firms expressed concerns about juggling competing priorities – such as how best to optimize their conflict and compensation disclosures, fine-tuning their Know Your Customer (KYC) screens and simultaneously evolving a “Best Interest” culture – all for the first time.
- Allocating resources: Incorporating Reg BI into an optimized, straight-through-processing model today begs the resource question: “How can we accomplish this?” Firms said they are grappling between what they can perform themselves versus what they should outsource. Some admitted that in-house tech efforts fell short of best-of-breed solutions – or survived the test of time. Their takeaway: Better technology experiences were those built by specialists.
How Reg BI Helps Optimize Processes
The inherent flexibility of consultants in the digital transformation business is another key to success. Such professionals are well-suited for creative and strategic collaborations that require working constructively with other vendors.
Many BRCS Survey participants cited the chance of “building a better environment for client trust” as one of Reg BI’s key benefits. Other advantages include helping firms accelerate their digital transformation. Implementing the rule, for example, can accelerate the process of re-engineering critical organizational processes like the digital onboarding3 of new clients.
To learn more about creating a fiduciary culture and meeting obligations by integrating Reg BI into operational processes and front-line sales practices, consider visiting our resource center: Regulation ‘Best Interest:’ Comply with Confidence and discussing your own challenges with one of our consultants.