COVID 19: Financial Services Industry’s Opportunity to Serve

The past several weeks has changed many aspects of our personal and professional lives. It would be an understatement that the pace of change, including the transition to work from home, taking care of children and elders, all while maintaining our own well-being, has required major adjustments for all. Amidst this period of change, the internet and the media have helped us become aware of how many facets of our world, including governments, industries and businesses are finding opportunities to cope. Through this volatile and unprecedented journey, we have learned about the importance of embracing the digital world, the heroism of the healthcare profession, and more importantly that we are all in this together.

Coordinated Relief

While it is difficult to believe, our world has changed dramatically. In response to the unprecedented challenges posed by the COVID 19 epidemic, governments have leaned on every possible tool to improve stability for businesses, citizens, and the economy. Similarly, global financial regulators have taken major steps to provide market participants and the overall industry regulatory relief. For example, On March 13, Office of the Superintendent of Financial Institutions (OSFI) announced measures to support the resilience of financial institutions by relaxing capital and liquidity requirements. The Canadian and US securities regulators have also announced significant relief measures to alleviate challenges. This includes a 45-day extension to regulatory consultations and major relief in terms of ongoing filing obligations.

The recent drop in the markets and the trickle-down impact on client portfolios has led to calls for delays in the implementation of Regulation Best Interest (Reg BI) in the US, and the Client Focused Reforms (CFR) in Canada. However, on April 2, the Securities and Exchange Commission (SEC) announced it would not be delaying the June 2020 implementation deadline for the Reg BI. In making this decision, the SEC’s Chairman Jay Clayton remarked that “financial professionals are required to never put their interests ahead of the interests of their clients.” Further stating that it is this very principle that gives confidence to the “more than 57 million households” especially during this period of economic uncertainty.

Time to do more

The wealth management industry has an opportunity to take a leadership position and embrace the underlying principles behind these regulations. This is particularly paramount for two reasons. First, it has taken more than a decade to land on these specific regulations that require the investment advisors to act in the client’s best interest. Second, this period of crisis may present a remarkable opportunity for advisors to elevate their client engagement process and help their clients. In fact, many studies including CFA Institute’s Relationship Alpha and Vanguard’s Advisor Alpha have certainly given fodder to how wealth management professionals can engage clients and create value, especially during periods of uncertainty and increasing social and economic pressures.

During this period of turbulence, it will be critical for the wealth management firms and advisors to ensure they are leveraging the right technology solutions that help generate advisor alpha and illustrate that they are truly acting in their client’s best Interest. InvestorCOM’s suite of digital tools help foster client engagement, ensure regulatory compliance and serve the client’s best interest. For example, ShelfMonitor enables dealers and asset managers to truly know their product (KYP) offering by staying informed about changes in their product shelf and helping advisors communicate changes that impact client portfolios in a timely and transparent manner. These tools will be especially essential for Investment dealers in the US as they get ready to meet the June 30, 2020 Reg BI and Form CRS deadline.

Positive response from the dealer community

Over the course of the last year, InvestorCOM has worked with market-leading dealers to develop ShelfMonitor.  The client feedback has been very positive:

ShelfMonitor keeps us audit ready and efficiently helps us stay on top of changes to the ever-changing investment product landscape.
– President and CEO of a major broker-dealer


Author:  Parham Nasseri, VP, Regulatory Strategy at InvestorCOM Inc.

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