Manage Clients (Reg BI)

Manage Client Compliance for Reg BI efficiently with Integrated approach to Care, Disclosure, Compliance and Conflicts obligations

Financial Wellness of investors and protection of their retirement income in the current market of high volatility, inflation and fraud is utmost on SEC, FINRA, FCA regulatory agenda and focus on investor protection with regulations like Reg BI (Regulation Best Interest) and Consumer Protection Duty ensure there is proper oversight. Regulatory Risk alerts and Findings from examinations are being shared with the Broker-dealer, Registered Investment Advisor and Wealth Management industry. Examinations on firms are becoming stringent and intense and the firms need to be prepared with data to substantiate that they are working in the Best Interest of their customers during examinations to prevent being fined.

Compliance officers need data from Registered Representatives, Registered Investment advisors, as they provide recommendations to their clients, to verify suitability of the products being sold to match their risk profiles, investment objectives. They need to ensure that oversight is offered before accounts are opened and transactions are conducted. Disclosures that reveal fees, restrictions and conflicts of interests have to be shared and proof of acknowledgement from clients needed for the books and records. Sales of unsuitable products in portfolios, trades that constitute violations like churn for fees etc., Outside Business Activity conflicts combined with Accounts, can help understand patterns from data, and can be very important to catch these violations early.

Lack of integrated data across the various functions, monitoring with excel files, multiple systems holding books and records can make many violations fall through the cracks leading to regulatory fines. GRACE for Client Management has been built with these exact needs in mind. Integrated portals for Client Management, Compliance and Client enable easy interactions to prevent violations and empower the teams with operational efficiency in their day to day functioning.

Contact Us for a Web demo of our GRACE Client Management system to see how easy it is for you to meet your Reg BI obligations

GRACE Reg BI

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In the Best Interest of Clients

Regulation Best Interest (Reg BI) mandates financial firms to manage client portfolios in the “In the Best Interest of the Client “ and has been in force from June 30, 2020.

Broker-dealers who make investment recommendations to retail customers must adhere to

  • Disclosure Obligation
  • Duty of Care Obligation
  • Conflicts of Interest Obligation
  • Compliance Obligations

Reg BI applies to recommendations of any securities transaction or investment strategy which includes recommendations about Sale, Purchase or Exchange of Securities and Account types, including whether to roll over or transfer assets from one type of account to another

All recommendations made must be documented, alternates suggested and the risk/reward criteria used to eliminate or include must be duly explained to the clients.

An Integrated Approach for Client Management for Reg BI

Empowering the Compliance Organization, the Client facing organization and the Clients through online portals that are integrated through a single source of truth can help make the process streamlined for both efficiency and proper oversight. Data Analytics from this integrated data, through online dashboards can be a powerful tool for understanding the clients, their objectives, the products being sold, trades being done, portfolio shifts, complaints and compliance oversight to help the organization position correctly for growth

How GRACE Client Management Can help you address the Regulation BI

GRACE for Integrated Client Management, is a cloud based web, mobile, state of the art solution that connects clients, client management teams and compliance back office to establish transparency, operational efficiency, regulatory compliance and superior customer service.

The Client Management portal provides access to advisors, registered reps with the tools they need to manage clients, choose correct products and portfolios, share disclosures and keep notes on recommendations.

The Compliance Portal enables the compliance group does suitability, product and portfolio governance, policies and procedures, attestation, training, track conflicts of interest, generate proper disclosures like Form CRS and others to share with the sales team, functions for oversight on trades, fees and client portfolio drifts.

The Client Portal offers Clients a mobile/web way for secure electronic interaction for product recommendations for approval, receiving disclosures sharing, account opening forms, view portfolio, holdings and trades, fees and billing, record complaints and interact with the organization

The Four Regulation Best Interest (Reg BI) Obligations

Disclosure Obligation

Broker-dealers are required to provide Form CRS, which is in a question and answer format, to clients.
Disclosures must contain

  • Summary of Fees,Costs ,Conflicts,Standards of conduct
  • Link to SEC’s Investor.gov Site
  • Should distribute these to clients before a recommendation of an account type, a securities transaction, or an investment strategy involving securities or placing an order for the retail investor.
  • Should also go out prior to the opening of a brokerage account for the retail investor.

Duty of Care Obligation

Broker-dealers must exercise reasonable diligence, care and skill in making the recommendation.

When making a recommendation to a particular retail customer, broker-dealers must weigh the potential risks, rewards and costs of a particular security or investment strategy in light of the particular retail investor’s profile

Components of the Care Obligation

  • Reasonable Basis Suitability
  • Customer Specific Suitability
  • Quantitative Suitability

Conflicts of Interest Obligation

Conflicts of Interest (COI) is defined as “an Interest that might incline a broker, dealer or a natural person who is an associated person of a broker or dealer to consciously or unconsciously make a recommendation that is not “Disinterested”

Broker-dealers must have policies and procedures reasonably designed to identify and

  • Disclose or eliminate all COI associated with such recommendations
  • Mitigate any COI that creates an incentive for an associated person to place the interest of the broker-dealer or such associated person ahead of the interest of the customer
  • Disclose any material limitations on the securities or investment strategies that may be recommended related to COI and prevent such limitations/related COI from causing the broker-dealer to make recommendations placing its interests ahead of the customer’s interest
  • Eliminate any sales contests, sales quotas, bonuses and non-cash compensation that are based on the sales of specific securities or specific types of securities within a limited time period

Disclosure Obligation

Broker-dealers are required to provide Form CRS, which is in a question and answer format, to clients.
Disclosures must contain

  • Summary of Fees,Costs ,Conflicts,Standards of conduct
  • Link to SEC’s Investor.gov Site
  • Should distribute these to clients before a recommendation of an account type, a securities transaction, or an investment strategy involving securities or placing an order for the retail investor.
  • Should also go out prior to the opening of a brokerage account for the retail investor.

How GRACE Helps Manage

Disclosure, Duty of Care, Conflicts of Interest and Compliance obligations

Set up and Manage Form CRS and other Disclosures

This is custom heading element

Offer Standardized Method for Client Risk Classification and Scoring

Manage Client Risk Classification based on their risk profiles to manage the type of products that may be offered to the type of client as well as standard fee structures that may be offered.

Offers Communications Tracking Dashboard

It provides a communications dashboard, so all the clients who have received disclosures and those that have not can be tracked quickly and measures taken to ensure clients receive their disclosures.

Enable Advisors and Reps to get the latest Disclosure documents on their My Portal

It allows them functions to access the latest documents on their My Portal so they can click and send it to clients thru emails or to the Client Portal if they have their clients set up on the GRACE Client Portal.

Conduct Product Governance

Helps manage the repository of products that are offered by the organization, their characteristics, risks, fees, expenses, costs and performance as well as the alternate equivalent products that may be offered, suitability notes for reps and advisors to use, and scan market for new products periodically to identify more suitable products

Keeps track of Client Acknowledgement

It provides functions for the Client’s to accept and view the disclosures and Form CRS on their Client portal and record their acceptance allowing the books and records to be updated.

Offers Client Management Portal

Client facing staff can gather and manage Client Information including client risk profile, objectives investment experience, do contact management. Portfolio creation as per guidelines, sending and receiving information from clients, monitoring their portfolio to their satisfaction, forwarding, managing and monitoring status of account opening, product suitability and other functions with compliance can also be undertaken here

Manage Conflicts Repository

All fees received for third party activities are documented and retained in the Conflicts Repository As part of the Compliance Process Reps, Advisors can report their Outside Business Activities, product commissions received and other conflicts as well as their U4 / U5 to Compliance, which can be reviewed. Any conflicts that need to be shown in Form CRS or other disclosures can be picked up from here.

Tools for Client Product Selection

Functions for Advisors / Reps to see product and their risk characteristics for each client type and alternatives as per the compliance guidelines and record pros and cons based on individual client’s need and objectives. The Client Management team can record notes on why the selection and alternate recommendations were made and share with client for them to agree / disagree on the recommendation and view histories of client conversations and feed backs

Manage Disciplinary History

Disciplinary History of Advisors/ Reps and any organizational failures can also be recorded and maintained to be included in Form CRS and other disclosures where needed.

Conduct Suitability Review

Client Management staff – advisors / reps can send the client selections for compliance approval and see their notes and status of approval online before they forward any recommendations to clients. All notes between them and compliance staff as well as between them and clients will be maintained on the system for audit trail

My Portal for all Staff

Offers Online Portal to all Users to submit their compliance obligations like pre-trade approval requests, gifts, political donations, outside business activities, U4 and others to Compliance officers

Compliance officers will be able to approve, reject or ask for more information to monitor staff through the information they submit and identify conflicts with defined procedures

Manage Account Opening

Post Suitability review and client acceptance, Account opening processes will be managed by compliance. All relevant disclosures must be shared with client before the account opening process and online confirmation can taken from clients.

Do Client Due Diligence

Client Due Diligence processes to verify various checks and processes for account opening can be undertaken and proof of verification gathered and reviewed in the system. Secure document sharing with the client can also be undertaken

Secure Client Portal

Allows Clients to have online, mobile access to all their information, be able to interact with their advisors, reps and the organization for all of their needs in a secure seamless way, anytime and anywhere to answer all their questions, do secure document sharing and see their transactions, holdings, fees and get a real time view of their portfolio.

Conduct Automated AML

Automated AML verification of client information against sanctions list, beneficiary ownership and adverse media can be undertaken on the click of a button. Funds transfer monitoring can also checked for suspicious activity and issues managed where exist

Manage Policies and Procedures

All of the Policies and Procedures of the organization can be centrally managed using this function along with Review, Comments, Version History and Release Management. All aspects of the Reg BI must be covered in the policies and procedures.

Do Product Usage Surveillance

Monitor products being offered to clients during the various phases of discussion and conversion, risk / return characteristics of products being used by client and suggest any changes if they don’t match the client risk profile anymore.

Get Online Attestation

Attestation templates can be set up for all compliance activities that the staff, advisors / reps need to attest on in addition to policies and procedures. These attestations can be sent out on a periodic basis to user groups/ users, as well as and when needed and the attestors can attest them online. Reminders can be sent for people who have not signed their attestations. Attestation dashboard can help monitor the status.

Provide Sales Behaviour Oversight

Monitor the communications between staff and clients for faulty suggestions, faulty behaviours , conduct trade monitoring and personal trade monitoring for to ensure the transactions are in line with client commitments and monitor fees and billing to identify excessive fees

Conduct Online Training

Training needs to be provided to the staff for all aspects of RegBI. Customized online training can be set up with provisions for testing after it to make sure staff, advisors / reps are well trained on all aspect of the Best Interest requirements. The training dashboard will provide detailed information on trainings undertaken and status of training.

Use Dashboards for Trends

Use of specific dashboards for compliance, communication, conduct risk, training, attestation, trade monitoring etc with slice and dice of information, trend charts, red alerts, easy to search and retrieve data and reports, help identify and monitor risks and issues as they arise for quick mitigation

The Great Value that GRACE Brings to You

You have a Powerful Tool to Manage your clients efficiently and prove you are working in their Best Interest

Be Compliant and Manage Clients

Web based / Mobile / Tablet enabled system can help you grow your clients and provide them the transparency and instant access through Client Portal and help your staff use information to stay connected with clients anytime, anywhere

Regulatory examinations can be handled with confidence

Examinations from regulators can be faced with confidence. Open transparent process for Compliance can be proven through the single source of processes and books and records

Efficiency in Product Governance

Centrally managed Product Governance allows organizations to help Advisors and Representatives follow the guidelines without Ambiguity for organization and Advisors and Reps.

Online Dashboards of Actionable Items

Everyone can have a dashboard of their own action items, alerts, followup status and other actionable items at all times with easy drill down to details whether it be the client management staff or compliance staff or clients themselves

Powerful CRM integrated to the system

Powerful integrated CRM helps Advisors/ Reps gets tools to suggest right products and capture client information and notes on all recommendations to prove best interest behaviour

Organization Ownership of Data

Organizations suffer when key risk and compliance staff leaves. The information is scattered if maintained solely by individuals and are lying on disks in various forms. GRACE becomes the single central repository of documents, data and processes enabling continuity even when key people leave the organization

Integrated End-to-End Solution creates great efficiency

An integrated streamlined approach to client management connecting client management front office, compliance back office and clients in a single system helps you manage your clients efficiently

Single Source of Truth for the Organization

By integrating the front middle and back, the clients, client management group and clients all are having a single source of truth for the information

Integrated data for Surveillance

Management from a single integrated source of data allows surveillance functions to be done on sales patterns, trade patterns and recommendations to stay on top of compliance violations

Client made Happy through Transparency

Client Portal gives latest updates of holdings, portfolio, transactions, fees and billing and financial plan to clients on their mobile / tablet / web where ever they are for complete transparency and allows them to interact with organization’s staff at all times for great customer service.

Easy to Integrate and Customize

GRACE offers easy integration with organizational source systems to enhance the functionality and extend it at low costs. This is a great benefit for back office compliance team, who can bring in all the relevant data into a single system through automated process allowing them to focus on compliance instead of data gathering

Client AML and Transaction Monitoring part of the process

Ensuring transaction monitoring through automated data gathering and automatic red flagging of trades based on restrictions and watchlists

Comes with Pre-built integration

GRACE offers comes with pre-built integration with various industry systems for AML, Personal Trade Monitoring. Organizations get the benefit of these sources when they buy our system

Integrated Trade Monitoring

Aggregated and automated trade monitoring from multiple custodian feeds and graphical trend analysis to help monitor best execution, fair client allocation, and identify front running patterns

No spend on Integration of Spot Solutions

Organizations buy spot solutions and face tough challenges to integrate them to create a common information base. Integration proves to be costly operation because of multiple technologies, time, effort spent and resources needed. Sometimes after all the money is spent it, still does not still meet the user needs. GRACE, by being already integrated reduces the unwanted spend, at the same time providing the information users need.

Easy Workflows for Internal Approvals

Online Forms for reporting and Approval Workflows for staff ensures compliance services them quickly and improves processing efficiency

Enormous Cost Savings

Enormous costs savings in unwanted labor for audits and examinations, avoid regulatory fines, legal costs, reputation risks and empowers the organization in managing risks.

Market Disclosures streamlined from a single source

Market Disclosures , review and release and sharing of market disclosure with clients made easy for quick delivery and monitoring that it has been delivered and acknowledged

Easy to use Automated Workflows for Efficiency

Useful workflows, alerts and dashboard red marks to ensure activities are undertaken on time.

Client Portfolio Drift can be easily identified

Client Portfolio drift monitoring can be done anytime to ensure that organization follows clients requirements and ensure there are no risky products being sold.

Client Complaints can be managed

Client complaints can be received online to ensure that action can be taken early.Managing customers and reducing complaints quickly can result in client happiness and more business

Fees and Billing violations can be avoided

Fees and Billing of clients can be monitored against defined client contracts to avoid violations

Latest News

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Annual Eversheds Sutherland Analysis of FINRA Disciplinary Actions Shows Huge Surge in Financial Sanctions

All information Quoted from the article https://us.eversheds-sutherland.com/NewsCommentary/Press-Releases/249220/Annual-Eversheds-Sutherland-Analysis-of-FINRA-Disciplinary-Actions-Shows-Huge-Surge-in-Financial-Sanctions?utm_source=vuture&utm_medium=email&utm_campaign=vuture-emails March 8, 2022 Eversheds Sutherland has completed its annual study of the disciplinary actions reported...