Reg BI. Who Cares? – ValueWalk Premium

Reg BI. Who Cares?

Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.

Q1 hedge fund letters, conference, scoops etc

Reg BI

Here’s yet another unpopular idea. Reg BI is no more than SEC posturing and won’t have a substantial impact on the way people do business.

Fiduciaries knocked off the soapbox they were never really on

Now that broker dealers can call themselves fiduciaries, according to a recent move by the SEC, the RIA firms are tumbling down off their “I’m a fiduciary” soapbox. And half their marketing agenda falls down along with it.

If you’ve read any of my past writings, you know I was never a fan of this goody-two-shoes, fiduciary line.

Let me quote myself:

“Saying people should pick you because you act in the best interest of your client is like saying they should pick you because you brush your teeth in the morning.” – Sara Grillo, CFA

Indeed, Reg BI is a nightmare for RIA marketing. It makes it so that the broker dealers can say the same pandering, soapbox-preaching statements that the RIA world does – the tagline they’re so proud of: “We put our clients’ interests first.”

Guess what: They were saying that anyways!

Go to any hybrid RIA/broker dealer firm’s website and you’ll see that 0.0% of them give any indication they’re optional fiduciaries. This is one of the reasons the public is so confused about this. Look at how it’s presented to them!

It doesn’t change anything because by now most reps are dual registered and all along they’ve been intimating that they operate in the same way that fiduciaries do. This puts an end to the bragging about being a fiduciary like you are Mother Teresa. This is who gets to brag. See these people breakdance? Click here.

Now that’s enviable. RIA firms, get ready to break out with the financial equivalent of a headspin.

Too boring for anyone to notice

In a press release earlier this month (in the typical legalese that is the way regulators communicate), the SEC has outlined that:

The Form CRS Relationship Summary will require registered investment advisers and broker-dealers to provide retail investors with simple, easy-to-understand information about the nature of their relationship with their financial professional.


Does anyone read the ADV, besides the advisor and the advisor firm’s legal team? I mean, has a single retail investor ever asked you a question on this?


People have zero interest in your Form ADV. Understand that there are people with criminal records disclosed on their ADV, and they’re operating thriving businesses. You can have every conflict of interest in the world in that ADV! People don’t read it. People don’t care.

Prospects make decisions about advisors emotionally. If the client likes you, they’re going to do business with you no matter what it says in your ADV.

Read the full article here by Sara Grillo, Advisor Perspectives

Saved Articles
Here’s a Tip: Read What Professional Investors Read

ValueWalk Premium is for investors looking to improve their investment process AND keep up-to-date on the latest industry trends.

It’s THE resource for value investing and hedge funds.   

And with a free three-day trial and $29.99 per month thereafter, it’s a value in its own right.