Product validation tools for best interest standards and regulations
CapitalROCK uses the RightBRIDGE AI engine to determine the suitability or best interest status of proposed products and accounts. RightBRIDGE uses a configurable product validation process to determine suitability and provides a well-documented procedure to achieve compliance under SEC Reg BI, PTE 2020-02, and state regulations including NAIC Model Reg and New York Reg 187. The process used for product validation includes the following steps:
RightBRIDGE has 3 modules that have been configured for Reg BI. The Product Profiler provides account and product validation for both product category and account type. The Investment Wizard provides product validation for specific investment products and investment platforms. The Investment Wizard also offers a fast track Fund Validation component that will compare a selected mutual fund with up to 4 reasonably available alternatives. The Annuity Wizard validates a specific annuity for purchase or exchange complete with a comparison of up to 4 reasonable alternatives.
Each RightBRIDGE Reg BI module provides three key components that assist with Reg BI compliance. The Validation Grid is a summary of the key factors evaluated complete with a validation indictor for each factor and an overall validation score represented by green, yellow and red indicators. The Validation Grid output also provides ReasonText™ that explains the results and provides more detailed documentation. Each Product Summary provides the details of the product including features and fees. Once the information is analyzed and the final output is given, a report can be generated that contains all the information that was gathered, the rollover analysis, and supporting ReasonText™.
Product Validation Tools for Reg BI
CapitalROCK has been on the forefront of helping financial firms manage the increased regulatory requirements of both federal and state regulations. CapitalRock provides a systematic process to help advisors select and/or validate the best product types and products for each individual client’s needs and preferences. CapitalRock’s RightBRIDGE product selection tools focus on providing unbiased suggestions using a scoring engine and ReasonText™ that explain why a product fits a client’s needs. RightBRIDGE® helps advisors determine which products available on their product shelf are best suited to meet their clients’ needs, objectives and preferences. An advisor can also self-select a product and use the RightBRIDGE® product validation process to confirm the product meets their clients’ needs, objectives and preferences. Firms are using the RightBRIDGE® technology to integrate Best Interest into their process as a business practice regardless of the constantly changing regulatory landscape.
Kehrer Beilan recently did a review of the Product Profiler and a section of the executive summary is outlined below:
“The author has reviewed on-line demonstrations and documents provided by the firm and has determined that the Product Profiler can be an integral tool for use in compliance with SEC Regulation Best Interest. Product Profiler and CapitalROCK’s Product Wizards have further applicability as tools to ensure compliance with the growing “assortment” of individual state-specific “Best Interest” standards and with FINRA’s regulatory interpretations of Reg BI obligations. A key concept underlying the structure of CapitalROCK’s product suite is the concept of rules-based validation incorporating the capture of client suitability information and product analysis that produces a validation score and associated documentation.
The licensing firm’s (distributor’s) suitability rules for product validation are configured as part of the RightBRIDGE implementation process. The scoring engine results are validated by the distributor against their own standards. This is typically accomplished by case-based testing, determining how the rules work in conjunction with one another by applying them to client scenarios that produce both positive and negative results.”
