Managing Supervision and Oversight of Associated Persons and the Organization with GRACE


The SEC’s latest regulation, the Regulation Best Interest (Reg BI) is now in effect with firms having had to bring their operations into compliance from June 30, 2020, and SEC examination notices now going out.  In this short article we will focus on the requirements how ensure comprehensive supervision and oversight over all associated persons to meet the Reg BI expectations, and, of course, how La Meer’s GRACE platform provides a full solution for this, and all of the regulation requirements.

As a short reminder, Reg BI mandates four Compliance Obligations:

  • Disclosure Obligation: required before, and at the time of recommendation acceptance, and if there are any changes in conditions due to new conflicts or changes.
  • Duty of Care Obligation: the exercising reasonable due diligence, care and skill in making recommendations.
  • Conflict of interest Obligation: establishing policies and procedures to identify and address conflict of interest.
  • Compliance Obligation: establishing policies and procedure to monitor compliance with Reg BI.

Defining the Compliance Expectations for the Organization and training everyone concerned

Policy and Procedure Management

Reg BI demands that the policies and procedures of the organization provide explicit guidance on how the organization will handle their client obligations to ensure they are acting in their client’s best interest.

La Meer’s GRACE allows management of the policies and procedure documentation, enables the review process with the different business functions, departments, branches and locations —ensuring their specific obligations are included, and managing the final release of these documents within the system. The holistic approach enables the organization to have a fully reviewed and agreed final version for reference for all purposes, including attestation by staff, as well as being able to demonstrate to the regulators for examinations that documentation has followed a full review and approval process, and that the necessary staff have attested to their understanding.


Having the various staff and associated persons attest that they understand their responsibilities under Reg BI is an important need that can be facilitated by GRACE.

The compliance group can set up the various templates for attestation, and send them to the user groups online. Associated persons and other staff can read and attest these online and the firm can be sure that they know their obligations. Whoever has not attested can be tracked using the status reports and dashboards so that the compliance group can ensure everyone has read and understood their obligations.


Training of staff and associated persons in the changed processes that they need to follow for Reg BI is an important aspect that SEC and FINRA are expecting to see in organizations they examine. These training modules have to be tailored to your firm’s products and services. Given the COVID-19 circumstances, online training has become an imperative. GRACE can help you set up customized online training programs, and deliver relevant online training to the associated persons and track that they complete them. GRACE also allows tests in the form of questionnaires to be set up in order to evaluate the level of understanding.  The feedback from these can be used to enhance, modify future training. Training dashboards can help monitor the training status, and the effectiveness, of the training programs across the entire organization. 

Online Forms

The compliance management functions include receiving, reviewing and recording conflicts, and recording steps taken to eliminate, manage, mitigate, and indeed, where necessary, disclose to impacted clients.

Compliance dashboard on all of these activities keep track of Associated Person’s activities to be used to identify any conflicts of interest or violations in their behaviour.   Conflicts can be reviewed by internal groups and mitigation, management steps discussed and final conclusions drawn and recorded on each conflict. For conflicts that need to be reported to clients, they can be tagged, and revealed to clients in the Form ADV, Form CRS and other mandatory client reporting.

Supervision of Client Communication

Associated persons will be provided with information on their Client Management portal from product governance and portfolio creation groups, including model portfolios which have been risk qualified for each type of client and their client risk profiles.  Client risk profiles for each of their clients can be generated using standardized client questionnaires, and portfolios are therefore matched to the client’s risk appetite and the client’s investment objectives.

GRACE provides functions to record all interactions in portfolio recommendations made with the client, the client’s notes, and suitability notes from compliance oversight are all recorded in one place. These notes are available for oversight review in the client compliance functions to catch any abnormal behaviour and amendments suggested to stay in the best interest of the client.

Associated persons and client management staff can access mandated disclosures documents for their particular client types, clients, and their current product and security choices, and have the ability to distribute to clients via email at the click of a button. The documents can be sent as email attachments, or as links that the clients can access, allowing a record of receipt and acknowledgement to be generated.

GRACE keeps track of the documents sent and the status of client acknowledgement allowing the firm to ensure all relevant disclosure have been shared with clients at the appropriate time.

Dashboards allow oversight to prevent violations of non-delivery of disclosures by providing information on status of receipt, documents created for various client types, and other such information for easy tracking.

Branches and Associated Person Examinations

GRACE allows online set up for branches, associated person information, their registrations, their outside business activities, and ways to examine them through online questionnaires to identify risky behaviour early, and keep track of previous violations, and identify bad actors.

The branch and associated persons dashboard enables identifying branches, and associated persons who have high violations, and to closely monitor them to prevent violations.

Trade Monitoring and Supervision

Automated feeds of all associated persons’ personal trades can be brought into GRACE to identify violations in their trading behaviour, insider trading and conflicts, that would have a potential impact on clients.

Client trades and their allocations can be monitored on GRACE with automated trade loads and red-flagging for products, and securities that were traded on behalf of the client, that are in conflict with what is allowed between the client and the organization.

Benefits of the Approach

  • The easy web-based, comprehensive, oversight functionality available to compliance covers all of the Regulation BI aspects that they need to supervise, in a single source of truth providing a powerful tool for the organization to ensure that violations are caught early, and remedial measures taken.
  • By enabling all the functions in a web-, tablet-, mobile-enabled system, GRACE allows all parties to interact with each other, where-ever, and when-ever, ensuring approvals are received quickly and based on the most accurate, and readily available information.
  • GRACE allows associated persons to interact with their clients in a compliant way and allows clients to receive their information in a transparent fashion from the organization, creating confidence in the process.
  • Bad actors can be identified quickly, and will desist from bad behaviour as all their interactions are traced and monitored.
  • Managing conduct risk with GRACE helps you stand in good stead for compliance examinations.
  • With easy to use dashboards, management have a view on all the functional status and failures as soon as they happen.

GRACE has everything you need in one place

La Meer’s GRACE platform has all the functionality you need to create, review, manage, approve and distribute disclosures required by the Regulation Best Interest, keeping an audit trail that all actions were correctly carried out.

Regulatory examinations are easily taken care of when all the required information is in one place, and a firm can demonstrate that it has taken its obligations seriously and really is acting in the best interests of its clients!

GRACE for Regulation Best Interest

Whatever stage you are at with your Regulation Best Interest implementation, the GRACE for Regulation Best Interest solution can help you.  We cover all key areas:

  • Form CRS And Disclosures Management
  • Policies and Procedures, Attestation and Training
  • Client Relationship and Recommendations Management
  • Client Portal
  • Client Risk Profile Management and Classification
  • Product Suitability and Governance
  • Portfolio Oversight Management
  • Advisor and Registered Rep Supervision
  • Conflicts of Interest Monitoring
  • Disclosures Management

The modular nature of the GRACE platform allows our clients to implement (and pay for) only the modules or functionality they need, so if you are having a challenge with one particular area of the regulation we can help, and quickly add the next pieces when you are ready without the need for additional vendors or integration costs.  The GRACE platform is 21st century technology, cloud-based, web, tablet and mobile-enabled allowing advisors, clients and compliance officers to interact whenever and wherever they are – essential in working from home or with a distributed workforce.  The solution is intuitive and easy to use, empowering staff to work in a compliant way, without unnecessary or complex overheads.

If you are working on your whole solution for day two and beyond we would be like to speak with you to understand the challenges you are having, and to discuss with you how GRACE might help you in easing your Regulation Best Interest demands.