“This gets to the heart of the changes that are required,” Radgowski said. “What we’ve done is taken all the data, research and tools we’ve developed over the years and created a reasonable alternative screener. What that means is that as the rep decides ‘I would like to recommend fund A,’ we will go out and show three, five, seven, nine alternatives from a fee, risk and performance perspective that may be better or similar. That data is presented side by side in a report so rep and investor can see right in front of them the investments that we feel are reasonably available alternatives."
He called the rule “a great first step in the right direction toward empowering investors because comparison will be mandatory,” he added.
In January, a Morningstar survey found that a third of B-Ds were not prepared for Reg BI. But that changed “literally over the last month, when firms began calling us and asking ‘What do I need to do to meet this obligation?’ Many firms are now furiously trying to prepare,” Radgowski said.
The trigger may have been the stern SEC reminder that went out in mid-January warning firms that the rule would not be delayed or rescinded and that they needed to be prepared.
“When that mid-January alarm bell went off, we really saw firms accelerate activity,” he added.
Firms are also engaging the firm to screen their platform offerings for reasonable alternatives. “At this point, we’ve engaged with a lot of firms regarding conversation about revisiting their product shelves to make sure quality regarding risk, performance and cost are there,” Radgowski said.