Lon Dolber (left), Ralph DeVito, Amy Webber and David Stringer; photo by Tom McKenzie
What are your thoughts on Reg BI, which has July 30, 2020, as its start date?
Ralph DeVito, The Investment Center: We are starting with what we did with DOL. We think it fits pretty well, though there is going to be a lot more that has to be added once we analyze it.
It's been a long haul. I don't know how much more best interest we can get into our procedures. We'll have to discuss more disclosure, a lot more disclosure.
David Stringer, Prospera Financial: It seems like we've been dealing with the standard of care now for over a decade, … and that the heavy lift we did was with DOL. We levelized compensation and eliminated a lot of our conflicts.
We feel like we didn't back off from any of that. We just didn't go to the deeper disclosures they were requiring in that final, final push on DOL. This [Reg BI] doesn't feel as scary.
DeVito: We trimmed back product, choices … at the high end and low end, and big [trailing commissions].
Stringer: A lot of the work has been done. Now we just had to do the nuanced BI work. The bigger lift is going to be just educating the advisors on how this impacts their business and some of the changes that are going to happen. Change management is always a little difficult.
Amy Webber, Cambridge Investment Research: For us, there was a lot of DOL development. Some of this we implemented, some we made optional and that some advisors implemented, … and some that we set aside until we saw what this final rule looked like.
We still feel pretty strongly that we have to get further guidance from the SEC, as there's a lot of ambiguity there. We are creating a long list, along with the Financial Services Institute and other firms, of some places where we would like clarity.
We actually created a risk committee within the firm. That'll probably be a permanent fixture, just like an investment committee or due diligence committee, so that we can just constantly be evaluating these things.
One thing on the advisor side that will be most intriguing is that we've got to automate the decision tree that they use. We know duty of care and duty of loyalty; advisors have rationale behind the decisions that they make.
