Transparency in the New World of Financial Services

Tim Donahue

By Tim Donahue | June 23, 2020

Transparency is a principle that is a critical part of today’s business world. It promotes honesty and openness between leadership and employees, and between companies and customers. Transparency just makes good business sense.

On June 30, 2020, transparency comes into focus industry-wide when the Securities and Exchange Commission (SEC) implements its Regulation Best Interest (Reg BI) and Client Relationship Summary (Form CRS).

Simply put, Reg BI and Form CRS put the best interest of the client front and center, ahead of the financial professional or firm.

This is great news for clients and financials professional alike. Clarity, accountability and trust are key tenets of the growing consumer empowerment age we live in. Preserving choice for clients empowers them to make choices based on what’s best for their situation. For instance, a client could decide to work with a financial professional under either a commission-based compensation model or fee-based compensation model. Moving the needle from “suitability,” which focuses on product, to “best interest,” which focuses on advice, strengthens the important client-financial professional relationship.

That relationship is also strengthened through the Form CRS, a clear, written summary of the financial professional’s products and services, and applicable fees. The goal of Form CRS is to help clients better understand their relationship with their financial professional.

We encourage clients to ask questions and fully understand the relationship with their financial professional. These questions are part of the regulation’s “conversation starters,” and can lead to fruitful discussions and deeper understanding.

Whether you need to find a financial professional, or you’re already working with someone, you may want to ask questions like:

  • Given my financial situation, why should I choose you as my financial professional?
  • How will you select the investments you recommend for me?
  • What are your qualifications and what do they mean for me?
  • What are your fees?

Your questions will be answered in plain English, not in complex legal language.

If you’re one of the more than 130,000 clients whose financial professional is a registered representative of HTK, you should take comfort in knowing that HTK and its financial professionals have always believed in the importance of strong relationships and personalized service. It’s in our DNA.

We’ve been here for more than 50 years and we’re proud of our record of supporting our financial professionals so that they can provide you with a top-notch client experience. What’s more, our parent company, Penn Mutual, has been around since 1847, operating under the same set of guiding principles.

Reg BI and Form CRS might be a new regulation, but for us, it’s evolution, not revolution. This regulation simply confirms our long-held beliefs and way of doing business—by strengthening relationships through transparency.

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