While many of our members reported positive results from their virtual training programs, such programs have limitations, since they sometimes fail to capture the nuances that only an in-person experience can provide. As a result, we asked the SEC to adopt measured expectations regarding the type and scope of training that firms were able to put in place in the runup to Reg BI’s implementation deadline.
Along the same lines, we also engaged regulators about allowing electronic delivery to be the default option for client documents and disclosures and worked to encourage the SEC to relax requirements for annual in-person branch examinations.
With health and safety at the forefront of our members’ minds, we believe these common-sense solutions will remove potential stumbling blocks and help ensure the long-term success of Reg BI.
Much Work Still Lies Ahead
We are pleased to see Reg BI implemented. However, a number of states across the country are continuing to move forward with proposals for their own individual fiduciary standards, threatening to create a patchwork of inconsistent or even conflicting regulations from coast to coast.
Now that Reg BI is in place, we encourage these states—and other regulatory agencies—to reconsider such initiatives while the benefits of the SEC’s new rule start to take effect. As one example, we expect in the near term that Form CRS will start driving important conversations between advisors and investors that will significantly strengthen clients’ understanding of their advisor relationships.
The Department of Labor’s (DOL) recently proposed transaction exemption shows promise for aligning DOL’s rules with the requirements of Reg BI. We are encouraged by the Department’s efforts and look forward to engaging with them to ensure consistency and clarity for investors and advisors.
Introducing new state-by-state standards and conflicting federal requirements now could undermine the promise of Reg BI, rather than contributing to the stability, transparency and clarity of the overall regulatory framework.
With Reg BI now a reality, we will continue to provide leadership to ensure its long-term success by facilitating productive dialogue among our members and communicating challenges and concerns to regulators. For advisors, firms and clients alike, the stakes are too high to do otherwise.
Dale E. Brown is president and CEO of the Financial Services Institute.