Meeting SEC Requirements – Technology to Support Your Efforts
Fergal McGovern — May 27, 2020 
The SEC’s Reg BI (Regulation Best Interest) comes into force in June 2020. Are you ready to communicate plainly with retail investors?
The Reg BI rule refers to “plain English” no less than 6 times. For example, you’ll find this on page 32; “the relationship summary should be concise and direct, and firms must use plain English”.
Given the push towards transparency, a plain English mandate is not that surprising. Most customers don’t speak ‘investment’. And as they consume your content, they’re likely doing a whole lot of other things.
Just think about what else you’re doing right now. You may have an eye on your inbox. Or you might be in a meeting. Cognitive load theory suggests that our brains have limited capacity to process information, especially complex information. It adds to customers’ cognitive load. This leads to confusion, and disengagement.
Even when you have a customer’s full attention, they are likely to struggle with complex language. The average US reading grade level is 8th grade. Hand on heart, how many 8th graders will be able to understand your investment documentation?
Clear communication improves the customer experience, reduces churn and attracts new business.
It also means you will comply with the SEC’s rules. By June 30th the recommendations you share with your retail customers must be compliant. And this, includes using plain English.
Brokers are swamped – Can Technology help?
But, here’s the reality. Brokers and advisors are already swamped. Do you really have the time to go through the rule and implement it? How can you easily know whether you have met the plain English requirement?
This is where technology can help. The right solution will provide you with two vital components:
- Readability scoring for individual writers
- Dashboards to show content clarity across all writers
You need to have compliant communications across all channels, and all content types. This includes product brochures, disclosure statements, even opinion pieces and research. Non-writers and SMEs (Subject Matter Experts) often create the content. So, they too need to score their own content to improve copy.
You must also be able to flag important watch words (eg: Jargon). A good technology solution will:
- Highlight complex words
- Alert you to long, run-on sentences
- Flag passive voice
- Show you the required grade level to read your text
- Flag industry jargon and non-compliant language
And you’ll need to see the readability of content across all your writers. Regardless of what department they work in. This oversight component should include measurement dashboards. These will allow you to measure if your assets are in plain English. They must answer key questions like ‘is all my content using plain English?’ ‘who’s self-scoring content for readability?’ ‘are we improving?’.
Recent advances in NLP (Natural Language Processing) and AI (Artificial Intelligence) facilitate these reports.
Technology is here to help brokers and the advisors. Plain English will mean you comply with Reg BI. More importantly it’ll drive better customer experience and deliver measurable results to your bottom line!
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