How Reg BI is changing the technology landscape

The Securities and Exchange Commission’s Regulation Best Interest has raised the bar for the industry’s technology landscape as advisers and broker-dealers face an overdue reckoning with their tech stacks. 

As much as the pandemic has spurred technology adoption in wealth management, Reg BI has kindled digital innovation that the industry has “been blind to for the last 10 years,” according to Celent’s Head of Wealth Management William Trout.

“COVID-19 has accelerated the digital learning curve,” he said. “With Reg BI, there’s nothing like a deadline to get people moving forward.” 

Regulation BI has opened up key tech trends for financial advisers, according to a recent Celent report. First, Reg BI is forcing a larger portion of the industry to access vast amounts of data which, in turn, has spurred more tech providers to develop or revamp multi-functional dashboards, Trout said.

“It used to be a narrow view of how to serve the client, but now the accessibility of a much broader data set challenges tech infrastructure,” he said.

Technology needs to provide not just a specific solution, but also enable secondary functions. For example, Riskalyze, which began life as a profiling tool, has developed a proprietary workflow encompassing product selection and trade orders. Bank of America Merrill Lynch also launched its Client Experience Workstation for advisers to personalize the work experience from connecting with clients to customizing data figures.

“Dashboards then translate into things like mobile delivery of the Form CRS, and augmented reality technology to put quick data in front of people wherever they may be,” Trout said.  

In fact, Reg BI’s impact on the industry is also expected to change the way that firms gather data. A larger amount of chatbots and voice-recognition dictation tools that can “memorialize, with time stamps, client recommendations and other interactions,” will be a key theme for the future, Trout said. 

As everyone has moved into “remote models” of functioning, there is a blurrier line between the physical and digital channels of communication, Trout said. While advisers would benefit from being able to fully leverage a chatbot or voice-recognition tool, the tech development isn’t advanced enough to deliver a proper client experience.

To assuage privacy concerns, the most “digestible data will be provided by the client herself,” Trout said. To that end, a demand in digital advice, or robo-adviser platforms, which allow the client to input their personal details, will likely increase in adoption as “physical and digital channels merge post-pandemic,” he said. 

The common thread between multi-faceted dashboards, chatbots, voice-recognition and robo-advisers is that “time is money, and if you as a vendor or adviser can save your user or client the only non-renewable asset in life, then you’re providing a great service.” 

For smaller non-wirehouse advisers, the competitive landscape will be more of a challenge as a result of the heightened tech adoption and innovation. “Small firms are going to really have to fight and think creatively about the technology they use because the ecosystem is shifting so rapidly,” Trout said. 

Firms need to be creative with how they develop their tech stack and keep up the momentum because “what’s out there today will be considered outdated in five or 10 years,” Trout said. “Having a configurable dashboard available on any device anywhere to have access to data spitting back at you in real time is going to be a rule rather than an expectation.”