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Adam Handler: The New SEC Reg BI Guidance Is Spectacular

News April 25, 2023 at 10:29 AM
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Adam Handler is a happy man.

Handler, the vice president of product management at SPS Family, said in an interview last week that living up to the expectations set by the new U.S. Securities and Exchange Commission Regulation Best Interest question and answers document might be challenging.

But he said having stringent, detailed guidance is better than finding out how the SEC interprets the regulations when an auditor comes by.

And the SEC's answers "are very much in line with what I expected," Handler said.

What It Means

Some financial services distribution executives think they can live with the new Reg BI guidance.

Adam Handler and SPS Family

Handler, a holder of the Chartered Retirement Planning Counselor professional designation, has been helping SPS Family support its 900 affiliated financial professionals since 2021.

The Ann Arbor, Michigan-based firm is the parent of two broker-dealers, Sigma Financial Corp. and Parkland Securities, and of an RIA, Sigma Planning Corp.

The Guidance

Reg BI requires advisors to look at the options that are out there, such as annuities and mutual funds; come up with justifications for recommendations; and document their reasoning.

SPS Family equips advisors with support tools, and Handler said advisors will need those tools — including artificial intelligence systems — to provide the kind of broad analysis that the SEC now expects.

He said part of the art will involve deciding what to tell the AI. "We have to define the universe that lives within these systems," he said.

But Handler said the guidance gives firms the flexibility to make reasonable decisions about what kinds of options the AI systems should consider.

He said he's still hungry for more details about how the SEC wants advisors to document their recommendations.

For now, however, he thinks his firm's disclosures should be compatible with the SEC's approach.

Adam Handler. (Photo: SPS Family)

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