Reinvigorating Reg BI Compliance

As firms continue to work towards a June 30, 2020 Regulatory Best Interest (Reg BI) implementation, financial advisors don’t anticipate that their firms will make changes that will dramatically disrupt relationships with clients or add administrative time to their day. In practice, this has proven extremely difficult to accomplish. Because there are many moving parts required for compliance with the rule, there’s mounting anxiety across the industry that a designed regulatory solution will not be ready in time for a smooth June 30 implementation. 

A successfully delivered Reg BI solution is completed in three phases: 1) identifying “what” needs to be done for compliance; 2) defining “how” to implement the solution; and 3) implementing the business transformation plan. Firms have expended a great deal of time, energy, and resources on identifying “what” needs to be done and are now somewhere between defining the “how” and executing on the plan. However, some firms now face the realization that the designed plan may not fully be implemented, or technology solutions will not be in place by June 30. As a result, leaders are considering workarounds to create a minimal viable operating model (MVP) for June 30 compliance. Yet, the MVP path comes at a cost. Choosing this direction will result in multiple rollouts and further disruption for clients and advisors, increasing the risk of inconsistent experiences and increased costs of implementation.

If firms consider a phased-in/MVP approach, it is imperative to understand the impact both during the interim solution(s) and the target end-state. To accomplish this, firms should:

  1. Develop current and future state journey experience maps for clients, advisors, client associates, and corporate office employees – clearly documenting what will transform for the clients, workforce, and operations.
  2. Identify and communicate the critical moments that matter across the journeys and how they may change from phase-to-phase.
  3. Document “how” the changing operating model(s) will change – across people, processes, technologies, and data.
  4. Execute a robust change readiness plan for the firm, tailoring methods to accelerate change for each impacted stakeholder group.

An effective change readiness plan is essential throughout the process, even more so with a multi-phased approach. Integrating design thinking practices into change management efforts can more effectively drive adoption  by involving employees impacted by transformation in the design of change solutions. Driving sustained change requires far more than communications and training—it requires an intentional focus on capturing the hearts and minds of employees through the design thinking techniques of empathy, iteration, and co-creation.

Regulatory change won’t be slowing down any time soon, as the industry is in a state of always-on transformation. So, how can firms ensure success with Reg BI implementation and set themselves up for sustained change? In the months leading up to the deadline, firms should:

  1. Complete a readiness assessment to determine the likelihood of implementation success, not only with checking the box on compliance, but also with successful transformation for the client and advisor experiences.
  2. Determine how front, middle, and back-office units will work together to design, develop, and deploy a unified solution. Firms can apply solutions like Accelerated Service Design to map out how the changes will be realized throughout a matrixed organization.
  3. Review the change readiness plan to ensure it is robust enough to address the various needs of the groups responsible for evolving ways of working based on the Reg BI requirements.

Looming threats of litigation, individual state mandates, and the DOL fiduciary hangover have created “fiduciary fatigue” across the industry. Now is the time to reassess “how” the “what” will be executed, map the changes that need to be accelerated vs. phased-in, and identify how to provide your clients and advisors the experiences they need to be successful. By following this approach, firms will not only “check the box” for compliance, but also enhance the firm’s value proposition in an increasingly competitive marketplace.