In June 2019, the Securities and Exchange Commission adopted Regulation Best Interest (known colloquially as “Reg BI”) which establishes a new standard of conduct for broker-dealers and independent financial advisors to follow when making a recommendation of any securities transaction or investment strategy involving securities (including account recommendations) to a retail customer. The rule went into effect on June 30, 2020.
Essentially, this regulation safeguards the interests of the investor by requiring the firm or advisor to demonstrate, when making an investment recommendation to a customer, that they are acting in the best interest of the customer at the time the recommendation is made, without placing their financial or other interest ahead of their customer’s interests.
Disclosure of the best interest information to the customer is made through a Client Relationship Summary (“Form CRS” for brokers and “Part 3 of Form ADV” for investment advisors). Form CRS requires that RIAs, broker-dealers, and associated persons disseminate information relating to the scope, terms and potential conflicts of interest, as well as any disciplinary history, to all retail customers.
Firms and financial advisors are required to provide Form CRS at the start of a relationship or recommendation when there is a change to any account belonging to the retail investor; when any of the disclosures contained within the Form CRS change; or upon request.
Firms need a robust solution to ensure ease of delivery and a mechanism to record that the client relationship summary was transmitted to and received by the client.
Digital Delivery and Secure Storage of Disclosure Forms
With Skience, a firm or advisor can use a guided workflow to generate the appropriate version of the disclosure form and then deliver the form electronically to the investor for review.
The Skience platform offers two electronic delivery methods that enable the receipt and review of the disclosure information:
- Delivery of the disclosure forms within an email to a client via Outlook.
- Delivery of the disclosure forms to a client via DocuSign, ensuring certified delivery.
In addition, if an investor would prefer to receive a printed copy of the disclosure form, advisors can print the disclosure within Skience to provide to the investor. A record of delivery is stored within the CRM.
To meet the mandate that firms are required to maintain and preserve these disclosures in an easily-accessible place, Skience will store a record of delivery, including the date of distribution to the customer, securely within the firm’s CRM.
We also offers firms the ability to route the disclosure email and completed DocuSign envelope into Skience Safe a 17a-3 and 17a-4 compliant document storage platform integrated with Salesforce or a Firms document repository for record retention.
Customized Solutions
Skience has the flexibility to design customized workflows that satisfy their unique disclosure needs and facilitate certified delivery of every disclosure for firms that have broader requirements or require a more sophisticated process.
Key Features:
User Experience
Guided workflows make it easy for advisors and firms to comply with the terms of Reg BI
Flexibility
Skience enables the documentation and delivery of the required disclosure forms—in both paper and digital formats—via Outlook or DocuSign
Documentation
A record of delivery is stored in both the firm’s CRM for transparency