A new set of US financial regulations require wealth managers to log a lot more detail - so a business that's adept at transcription and rapid turnaround of conversations is going to be busy. We talk to a firm operating in this space.

The US Security and Exchange Commission’s new Regulation Best Interest rule is due to kick in from the end of June, shaking up how wealth managers go about their business. The rules follow a failed attempt by the Department of Labor to enact a fiduciary rule that would have introduced a “best interest” test of how financial advice is provided. The new rules ruffled feathers: senior wealth management industry figures criticized the SEC rule as diverging form the existing fiduciary standard required of registered investment advisors.

The new regulatory regime deals with two phases in an investment story: First, before an advisor makes a recommendation to a client, and secondly, when the idea is executed. Showing that necessary tests have been conducted for both phases requires a lot of work – which is where digital tools come in. Regulation BI also imposes a duty on how people go about the transaction processes involved. The long-term payoff of this new regime is hopefully to improve the quality of the client/advisor relationship.

Complying with Regulation BI therefore involves – you guessed it – even more reporting on conversations and on the information put in front of clients. This means that the businesses that can help advisors transcribe these conversations rapidly and accurately are going to be in demand. One such firm (interviewed here in 2019) that sees an opportunity in Regulation BI is CopyTalk. The business likes the term “If it isn't documented, it didn’t happen.” 

This news service recently caught up with Maree Moscati, chief executive of Copytalk, about how it expects Regulation BI to affect its business. 

Given the importance of technology in helping advisors/others track conversations in and around financial advice to comply with Reg BI, your firm is obviously in an important position. Can we start off by you telling us what opportunity - and obstacles - Reg BI creates for Copytalk? 
Reg BI offers both Copytalk and wealth management firms a significant opportunity to get closer to their clients. For the firms, Reg BI can create the transparency that clients are seeking, and advisors can have deeper conversations with their clients. Explaining investments and why they are in the “best interests” of clients has been a missing link in the drive to more holistic and un-conflicted financial planning. 

For us, through the impact of Reg BI, we have had more financial firms join our Copytalk family. The enterprises are now adding our technology to their tech stack, recognizing the need for not only documentation memorializing client engagements, but also the verification of continuous monitoring of their client accounts. That means that we are going to be taking on a tremendous amount of additional incoming dictations. We needed to ramp up recruiting and training accordingly. Additionally, since all our transcriptionists work within our facilities, we have had to divert a sub-set of transcriptionists to work remotely.  

How long have you prepared for the launch of Reg BI? Are there particular offerings you have that are specifically linked to it? 
We've been preparing for Reg BI since its inception and then ramped up our preparation over the past 60 to 90 days. We are going to offer a particular technology, however, that is still in the development stage and will not be available for release until late June, early July. In our pilot test with advisors and firms alike, the positive response to our technology has been overwhelming. 

What sort of resources do you have for handling Reg BI that you have specifically had to bring out?   
As I mentioned earlier, we are going to offer a new technology that is still in the development stage. The advisors and firms involved in the pilot test have been very excited about it, and so are we!

What is the main type of work that you expect to do as a result of this new regime? 
All of what Reg BI mandates for the advisory world is going to further increase the importance of documentation. Consequently, we anticipate a tremendous increase in dictations due to the fact that Reg BI mandates not only [require] continuous monitoring of one's account, but also documenting conflicts of interest if appropriate and/or revealing any kind of fee or commission structures.

We also expect an increase in our Digiscribe environment, which transcribes video/audio presentations, training videos and podcasts among others. Already, we have been transcribing a large number of compliance protocols on how firms should handle the Reg BI.  

The wealth industry arguably has enough regulation and compliance burdens already to handle, and the sector needs to bounce back from the COVID crisis. How do you say that your firm can help firms overcome the Reg BI requirements efficiently?  
Yes, definitely. Complying with Reg BI requires so much documentation. Take, for example, the Obligation to Client Care, which says that clients need to understand the risks, rewards, and costs of the recommendation. Firms needs to document that clients received this information and also that they understand it. Firms also need to document conversations over any potential conflicts of interest. The list goes on and on.

Copytalk enables advisors to speak to all of these points, efficiently, effectively, and with relative ease. Our apps offer fingerprint and facial recognition, so signing on is simple. Our latest technology, the Copytalker, allows enterprises to place our technology right onto an advisor dashboard or within a CRM so advisors have one-touch dictation, securely from any device they are using. Speaking one’s notes as opposed to typing proves to be many times faster, and waiting just one hour after a meeting to dictate can lose approximately two thirds of the details of that meeting. 

How much of your work would you say is now driven by regulatory/fiduciary requirements of this type? 
I would say a lot of our work is driven by regulatory mandates, whether it is Reg BI, Know Your Customer, Regulation 2111, or even the CFP Code of Ethics. For enterprises, maintaining good documentation establishes that you are doing what you need to do in the best interest of the client. That has always been the underlying mandate, whether it be a full-fledged regulation of a code or ethical standards. Given our transcriptions’ role in documentation, I would say our work is probably 30 per cent mandated by regulatory requirement, and 60 per cent by advisors and their firms independently recognizing the value of efficient and secure documentation. I would say 90 per cent of the advisors that we work with take good, copious notes. Even so, since advisors typically juggle so much in the course of a day, the best practice is to memorialize conversations and follow-up steps through transcriptions.

Where do you see the greatest demand coming from in the North American financial services industry? Are you targeting specific types of sector? 
The wealth management and financial services industry in general is our main sector of industry. The greatest demand is coming from the broker/dealer, independents, RIAs, and CFP arenas. We don't see much in the insurance arena. However, this will probably change with Reg BI. We also do some work with law firms and with large sales institutions who want their outside sales team to take substantial notes regarding their clients and implement them within their CRM systems. However, our main business is the wealth management financial services industry. 

When do you expect the workload to start really cranking up, given all the difficulties caused by COVID?
We have seen a tremendous increase in the amounts of dictations from the start of the pandemic. Once everyone started remote, our incoming dictation volume increased 30 to 40 per cent over our norm. Of course, the market fluctuations, clients concerns, and advisors having more conversations also contributed to the substantial increase. This is normal. When markets drop, or we have an issue like the COVID pandemic and people are scared and nervous, it is a critical time for wealth advisors to reach out to their clients to calm their nerves, to explain what is happening, to re-evaluate their portfolios and if their risk tolerance levels have changed.     

Who is leading Copytalk's work in this area, or is it not being assigned to specific teams or groups?
Copytalk is unique in the fact that we have a corporate office, and then we have four facilities where all of the transcriptionists work from. We have four operation offices that are located throughout Florida and the state of Georgia. We work collaboratively as a team. There is not one specific person who works on one specific item, in any area, whether it is operations and recruiting on the transcriptionist side, our IT team, or our technology development team. 

I find that this is the most efficient and effective way to develop thought-leaders, to share ideas, and really to have inclusion into the diversity of what we bring forth to our clients. I like a collaborative team; I like working in that environment. I think it empowers the synergy throughout the entire organization.

Logistically, what changes has your own business had to manage during the pandemic and what lessons would you pass on? 
Well, we had to make some temporary changes to our process. Our transcriptionists work in our US-based facilities: they are not home-based, and they are not overseas. Everywhere was impacted.

Because we had to social distance, and because we couldn't have anybody coming into our facilities sitting in their stations next to each other, we had to make the decision and follow up with our continuity plan that a sub-set of our transcriptionists would have to be remote. We had to pull together a plan of action of what the work-from-home environment would be like and add additional security protocol enhancements. There were a lot of adjustments we needed to make, so that our clients would have the least amount of impact, and we were able to achieve this by having an amazing, collaborative team.