Regulatory compliance continues to be a top priority and cost center for wealth management firms. The preparation for and implementation of Form CRS and Reg BI increased the budget and resources wealth managers spent on compliance activities.

The median implementation cost for Reg BI is $3.28 million, with 54 percent of those costs attributed to technology. Firms focused on choosing and investing in the right digital solution will have an advantage in staying ahead of changing regulations.

Here are some of the early results from Reg BI and Form CRS, what concerns regulators see already, and how financial advisors and home office professionals can adapt their processes to meet compliance requirements more efficiently and build a more reputable relationship with their clients.

Early Feedback from Regulators on Reg BI Compliance

Overall, regulators agree that firms are rising to the challenge of this new rule. Attempts to meet compliance requirements have so far been enough, but that may not last. Soon, regulators may expect stricter adherence to the rules.

The Form CRS continues to be the primary source of problems for firms. Feedback about inadequate compliance includes:

Because of some of these issues with Form CRS, the SEC updated its FAQs and revised their guidance to help wealth management firms meet the requirements and spirit of the rule.

Reg BI Tips for Financial Advisors

Operationalizing Reg BI requirements is a significant challenge for firms. Many firms have had to make substantial adjustments, including but not limited to changing technology, systems, and advisors’ relationships with their clients. Specifically, a Deloitte survey found that 36% of respondents ranked defining best interest as the most challenging operating model change.

Advisors shifting from a simple fiduciary requirement must clearly describe the differences in a transactional and advisory (fee-based) relationship. Using Reg BI as an opportunity to turn compliance into trust can build and reignite client relationships. Form CRS’s essence is documenting the rationale for recommending a specific fee structure and embracing fiduciary advice.

Investors today want transparency, simplicity, clear costs, and communication about fees. Taking the compliance conversation deeper than only meeting guidelines helps investors feel more confident and safe in who they go to for investment advice.

Reg BI Tips for Home Office Professionals

Documented processes are the standard for any compliance program. Documentation is also where firms should start when they consider Reg BI. But, treating Reg BI as merely an extension of FINRA standards is missing the mark. Firms should tailor their compliance and documentation for individual business models.

For instance, written policies and standards should not mirror the written regulations. Reg BI requires that these policies fit their business models, including documentation of alternatives for customers, considering costs.

Cost considerations are a critical component of Reg BI, and the SEC FAQs include special callouts for IRA rollovers. Firms should write these disclosures in language clients understand and explain why they recommend a particular course of action, fee structure, or product.

Finally, conducting a conflict of interest audit can uncover gaps in compliance and fortify documentation for regulators. Firms should review payout grids, product menus, and sales practices and consider each of these factors from the client’s perspective.

When writing policies, firms must identify and disclose all conflicts of interest and mitigate any conflicts that might put their interests above the client’s interests.

The regulatory burden on wealth management firms is a significant cost center. Taking a holistic approach to compliance, considering the customers’ perspective, and seeking to build trust and a partnership with clients is key to not only meeting but exceeding regulators’ expectations for Reg BI compliance.

Since the SEC implemented its Regulation Best Interest rule in June 2020, brokers and wealth advisors have navigated how to apply it in their firms. Despite some murkiness and gaps in the rule, many organizations have done their best to give a good-faith effort to bring its underlying principles to their clients.

The challenge of establishing and maintaining Reg BI compliance presents many wealth management firms with a daunting operational task. Some Reg BI compliance guidelines require significant time, effort, and resources to implement across an organization. While this adjustment is challenging, it is possible. Firms that meet Reg BI compliance head-on will find success by making adjustments in their business model and using innovative technology to streamline their processes.

Operationalize the Form CRS

A lot of concern and confusion regarding Reg BI compliance comes from the Form CRS. This relationship summary disclosure gives retail investors information about the nature of their relationship with their advisor. Firms must provide certain information in Form CRS that can be time-consuming to obtain and cumbersome to compile. In a recent survey by Deloitte, 79% of financial advisors felt that implementing Form CRS was the most difficult part of operationalizing Reg BI compliance. This was particularly true for 56% of large firms and 61% of small firms, respectively.

While many firms struggle to implement and deliver Form CRS to their retail customers, growth-minded firms have met this challenge and become experts in Form CRS by:

Form CRS is viewed as the biggest stumbling block for wealth management firms but only requires a shift in thinking and policy to become a strength and a differentiator.

Invest Well in Compliance Tools

Wealth management firms have an opportunity to evaluate their business models and prioritize compliance. Regardless of changing administrations and regulations, investing in compliance tools makes changes far less disruptive.

Deloitte’s 2020 survey found that much of the cost for implementing tools, processes, and infrastructure for Reg BI compliance is incurred up-front, which can cause a major upheaval in daily operations. 20 of the survey participants reported they allocated approximately $114 million combined for readiness efforts related to Reg BI compliance. $61 million of this investment (54%) was spent on technology and tools needed to support dealer-brokers and advisors to prepare and provide the required disclosures. These major investments and adjustments are why panelists in a 2019 webcast for InvestmentNews said that firms could not procrastinate complying with Reg BI.

To counteract the up-front investment in Reg BI compliance, firms have adjusted to restore balance and acclimate their teams. Deloitte’s survey found that 69% of participants planned to make shifts in business strategy, including:

Wealth management firms should also consider the maintenance costs now associated with Reg BI compliance, which was estimated to be around $2.9 million per firm. Investing in the right tool for automating and streamlining Reg BI compliance can save a lot of time and money.

Consider a Digital Strategy for Reg BI Compliance

Innovative firms have found that the right tools and technology simplifies the process for Reg BI compliance. For example, choosing a paperless, cloud-based compliance management system provides significant benefit to firms:

Reg BI compliance is a new standard that requires significant time and investment to get right. While some firms have been slow to adapt and re-think the way they do business, many have allowed this new process to unlock the potential that technology and innovation bring to streamline processes, empower their advisors, and set themselves and their clients for short and long-term success.


David Knoch is CEO of Docupace a solutions provider focused on digitizing and automating operations in the financial advice and investment industry. David currently serves as the Immediate Past Chair of the Financial Services Institute (FSI) Board of Directors and has been voted one of the 25 most influential people in the Investment Advisory industry two years in a row – 2018 and 2019.

We are excited to share that Docupace was selected as a finalist in the 2020 Industry Awards (the “Wealthies”) within the Document Management Category for our Regulation Best Interest (Reg BI) solution. The awards program received 625 entries from 221 companies this year, and 155 organizations were selected as finalists.

The industry awards honor outstanding achievements by companies, organizations, and individuals that support financial advisor success. Congratulations to all the firms and people that were selected as finalists and thanks to our amazing customers for their partnership and support.

Here’s the list of the 2020 finalists.

All the major in-person activities will all be held as virtual events—including the September 10th awards presentations traditionally held in New York City. The virtual events will open up attendance opportunities to a much broader audience, and with it bring more transparency to the industry. Awards Application Details

Often, companies get nominated, and the details of award submission get left out. I want to take the opportunity to share the details of the application. If you have any questions, please feel free to contact me. I’d love the opportunity to speak with you about how we can help your firm succeed.

Category: Technology Providers – Document Management

Nomination Title: Reg BI Integrated Tool (Tracker BI)

New Initiative Description:
Customers of Docupace’s Document Management solution can leverage the integrated capabilities of Reg BI tool called Tracker BI per below.


New Initiative Goals:


New Initiative Results:

Using Tracker BI:


Impact and contribution to the success of the financial advisor community:

By using Tracker BI, the financial advisor community can:


Under SEC Regulation Best Interest (Reg BI), broker-dealers and financial advisors must place the best interests of their customers (retail investors) ahead of their own.

Reg BI includes a variety of new rules and obligations, but the most tangible is a paperwork requirement: Form CRS.

What is Form CRS?

Form CRS is a relationship summary disclosure form (“CRS” stands for customer or client relationship summary).

As part of their disclosure obligations under Reg BI, broker-dealers and financial advisors are now required to share versions of Form CRS with retail investors.

For a more in-depth explanation, see Electronic Delivery & Storage of Form CRS: The Key to Simpler Reg BI Compliance.

What is the purpose of Form CRS?

According to the SEC, the main purpose of Form CRS is to provide retail investors with “simple, easy-to-understand information about the nature of their relationship with their financial professional,” in order to help them compare services between firms and make more informed decisions.

What must be included in Form CRS?

Specific requirements vary based on the services provided by the firm, but at a minimum, Form CRS must include:


View complete SEC Form CRS instructions

When do firms have to send Form CRS?

Firms must deliver Form CRS to customers and prospective customers before or at the earliest of:


Firms must also provide Form CRS upon client request, and whenever amendments or updates are made to the content of Form CRS.

How can I learn more about Form CRS?

If you still have questions about Form CRS, here are a few helpful resources:


Additionally, small firms may send implementation questions to the newly established  inter-divisional Standards of Conduct Implementation Committee at