Why Reg BI won’t ‘move the needle’: Q&A with In|Vest speaker Mike Capelle of United Capital
June 12, 2019 10:11 AM
What’s your take on the SEC’s Regulation Best Interest rule?
I love the direction: Anything to help consumers better understand who they are working with and what their incentives are. Are they acting in [consumers’] best interest? Are they a fiduciary?
The reality and what concerns me is does that translate to anything meaningful as it gets implemented. Will consumers understand the differences between best interest and suitability? I don't know if it will really move the needle.
The reality and what concerns me is does that translate to anything meaningful as it gets implemented. Will consumers understand the differences between best interest and suitability? I don't know if it will really move the needle.
Will RIAs be able to differentiate themselves as fiduciaries?
We use these terms in the industry, but does the rest of the world understand these concepts? It’s just not reality. I don't put a lot of significance on the value of that sort of differentiation. To me, we need to put consumers in a better place by holding professionals to a higher standard. If that’s what we’re looking to accomplish, it’s a great thing and a direction we should all be heading.
What’s the biggest challenge for RIAs?
Interoperability. Being able to integrate the systems they already have to be able to get data where they want without duplicating data entry and all the accuracy problems that can create. We still see advisors that don’t take advantage of technology.
How can advisors pick the technologies that will create the most efficiency?
Advisors have to decide if they want to be the CTO. Is that your highest and best use? Advisors tend to not think about the value of their time and where they should be focused. There are so many other ways to execute on good technology and advisors should think about that instead of doing everything themselves.
There’s a whole range of solutions out there — but they are point solutions. Then advisors are meant to figure out which ones are right for them and their offices and their clients and tie it all together into a cohesive system. It’s a major challenge for advisors.
There’s a whole range of solutions out there — but they are point solutions. Then advisors are meant to figure out which ones are right for them and their offices and their clients and tie it all together into a cohesive system. It’s a major challenge for advisors.
Where do you see the most opportunity?
There is a lot of opportunity in the whole AI realm. I know that gets thrown around quite a bit, but there is so much data available. There is so much more we can do to help advisors when they're working with clients to understand and think about the most important topics to them.
How can that data be put to use?
We have a fair amount of data that we can use, obviously in an anonymous way, to look at particular trends within certain populations and use that to enhance relationships going forward. That raises awareness around key areas that people in similar situations have and may be important to the folks advisors are talking to.
We’re just scratching the surface here and there is so much that can be done. The folks in the industry have been getting the systems in place that capture a lot of information. How do we in a responsible way learn from that and provide better service to clients going forward?
We’re just scratching the surface here and there is so much that can be done. The folks in the industry have been getting the systems in place that capture a lot of information. How do we in a responsible way learn from that and provide better service to clients going forward?
What are some of the dangers for the RIA channel?
There's always the escalating regulatory burdens that come with operating your own practice and that complexity adds risk. In order to compete, you have to be using technology.
You also have to engage with clients online. Advisors have to start addressing cyber security risks and the expectations of the SEC that you are doing what you need to be doing.
Those expectations have been increasing fairly quickly. There’s an added complexity in running your own business, in this regulated space, which is certainly a headwind for folks that are going independent.
You also have to engage with clients online. Advisors have to start addressing cyber security risks and the expectations of the SEC that you are doing what you need to be doing.
Those expectations have been increasing fairly quickly. There’s an added complexity in running your own business, in this regulated space, which is certainly a headwind for folks that are going independent.
Where do you see the advisor tech market moving?
There's been a lot of improvement and great options available in the delivery of core wealth management services, particularly around investment management.
The real trends and opportunities are around the shift from back-office to front-office technology — the technology that’s being used to engage clients. This is technology that clients have seen in other industries. Consumers have been getting trained by other industries about what a high level of service is and what an offering should look like. There’s a big gap in how wealth management interacts with clients and how they’re using tech.
There's been a ton of fintech focus on back-office and operational efficiency. How do you scale legacy wealth management? Now, the experience is on the other side, facing clients, and focused on how technology is used externally to enhance the relationship between client and advisor.
The real trends and opportunities are around the shift from back-office to front-office technology — the technology that’s being used to engage clients. This is technology that clients have seen in other industries. Consumers have been getting trained by other industries about what a high level of service is and what an offering should look like. There’s a big gap in how wealth management interacts with clients and how they’re using tech.
There's been a ton of fintech focus on back-office and operational efficiency. How do you scale legacy wealth management? Now, the experience is on the other side, facing clients, and focused on how technology is used externally to enhance the relationship between client and advisor.
