InvestorCom with Dave Carr-Pries | E266

Reg BI and CFR one year later.

In today's episode of Fintech Impact, Jason is going to talk to Dave Carr-Pries, Vice President – consulting services at InvestorCom. Today they are going to talk about how the implementation of CFR and Reg BI has basically panned out in the last year and where the successes and challenges are? 

Episode Highlights

  • 1.31: InvestorCom is a fintech company, they provide software really focusing on helping the industry make better financial decisions, and with that means their focus is on compliance solutions that aim to make being compliant as intuitive as possible and removing friction and barriers from advisors of dealers. 

  • 2.58: Without an advisor or an investor doing anything, when fund companies change their products or things change about their products, suddenly a portfolio may become unsuitable, says Dave.

  • 3.50: 3-4 years ago, when the regulatory journey began no one really knew the size of the problem. They knew it was important, they said you should look for significant changes, that's obvious. But how often does change happen?

  • 5.06: The trend both in Canada and the US from a regulatory perspective is to make these regulations principle based. So, you use the term material change. The regulators introduced a new word called significant change and left it up to the dealers to define it so while the concept is well understood. How you bring it to life can vary from dealer to dealer. 

  • 7.23: Dave discusses what is the kind of data points for the elements that you look for significant change.

  • 08.03: When a significant change happens, an advisor has a bunch of activities to do. It's not new activity but it's the trigger to say when this happens. Now think about the suitability of a portfolio, think about KYC, is that updated, think about rebalancing or any changes that need to happen with that client and instead of doing it on your time, it's done based on a trigger in the industry and a product change.

  • 09.30: People like complaining about work and it's like this is not hard. You need to have investment thesis for how you actually manage portfolios and do it consistently and then you just have to look for changes that are pertinent to that, says Jason.

  • 11.02:  When we get the advisor position data, we are able to kick out weekly alert files to each individual advisor based on their positions and only their positions, says Dave.

  • 14.02: Dave shares how they filter and pass data down to people and give them what to look at.

  • 15.30: When an advisor is presented with kind of a relative comparison, things do move slowly and we are starting to see a trend and making recommendations of products that stack up, says Dave.

  • 17.40: Jason discusses how it is not hard from the advisory perspective to have a documented process.

  • 20.01: Anyone who just basically buys nothing, but passive indexes have an easy time says Jason.

  • 22.01: As an advisor professional judgment is about identifying red flags and if there are any red flag be prepared to document your justification relative to those flags.

  • 25.18: Dave talks about the evolution of product comparison. Dave says that they will see the data rolling and once they see trends, how their behaviors are, how their behavior is being affected, how do they move the needle further?

  • 28.08: In the ideal world we have the same yardstick, we have the same metric for wrist within the profiling that we do in the product comparison world and the product monitoring world, says Jason.

  • 29.30: We put out a process, our documentations are in place, this is really called practice management 101, says Dave.

  • 31.02: To not think through the advisor experience and how to make this a manageable experience is a gross failure of management like that, says Dave.

3 Key Points

  1. Jason and Dave talk about the big changes in regulations both in Canada and US and InvestorCom dealt with the changes. 

  2. Dave explains how they have taken self-monitor solution that builds the industry audit trail and added advisor alerts. 

  3. Dave shares that they are working on the product recommendation side and how to do that product comparison or consideration of primitives.

Tweetable Quotes

  • "People probably made decisions that weren't good or interpretations that the regulator won't agree to." - Jason

  • "This kind of change management or change monitoring process mean thanks to the regulator's kind of a new thing. So, no one really knows what that magnitude is." - Dave 

  • "My concern is people for shooting an arrow and then drawing the bullseye around it." – Jason

  • "Performance doesn't tell you squat. It's hard to really find apples to apples comparisons in those regards." - Jason

Resources Mentioned

Fintech ImpactJason PereiraFintech