Riskalyze is updating its risk tolerance technology with new features designed to help advisers comply with the Securities and Exchange Commission’s Regulation Best Interest.
After assessing a client’s risk tolerance, Riskalyze now provides advisers with a Reg BI-compliant workflow to create and implement an investment proposal. Advisers can then attach and track the delivery of Form CRS, which summarizes information about services, fees and costs, conflicts of interest and any disciplinary history related to the adviser or firm, and execute the proposed investments with the automated trading engine that Riskalyze introduced in October.
Advisers can show clients a single report detailing fee structure, risk tolerance and expense ratios for a proposed portfolio.
The idea is to automatically document that advisers made investment recommendations in a quantitative and non-biased manner. Riskalyze said integrating Form CRS into investment proposals will make it easy for broker-dealers and RIAs to demonstrate compliance in examinations.
Riskalyze also has a configurable dashboard that gives home offices visibility into the entire process for ongoing monitoring. Firms can establish lists of approved or forbidden investments in the proposal engine, and supervision teams can search by asset class to make sure portfolios are aligned with the client’s risk tolerance.
The technology vendor has long used compliance as a selling point for the Riskalyze product. It pitched the product in 2015 as a solution to the now-dead Department of Labor fiduciary rule and made Reg BI a core talking point of its 2019 Fearless Investing conference.
“Several major wealth management enterprises” are using Riskalyze to comply with Reg BI, according to Riskalyze CEO Aaron Klein.
“The vast majority of advisors and enterprises that we serve are already compliant with most of Reg BI, and their use of Riskalyze puts them on third base when it comes to complying with the toughest part of the rule — the standard of care,” Mr. Klein said in a statement.
The SEC will begin enforcing Reg BI June 30. The regulator recently released answers to frequently asked questions about Reg BI as firms prepare to meet the deadline.