Four new requirements under Reg BI—the Disclosure, Care, Conflict of Interest, and Compliance Obligations–will have to be met irrespective of whether a broker-dealer offers the on going monitoring of a retail client's assets.

The Securities and Exchange Commission's new conduct standards for broker-dealers, clarifying rule on investment advisors' fiduciary obligations, and new disclosure requirements that go into effect June 30 of 2020 will impact nearly all aspects of the investment and retirement services industry, according to attorneys with Drinker, Biddle, and Reath.

"It's a very aggressive schedule" for implementation, said Sandra Dawn Grannum, co-chair of the firm's Commercial Litigation Team, in a webinar. "There is no reason to believe that implementation of the rules will be put off."

Related: How SEC Chair Clayton answered 7 criticisms of Reg BI, IA fiduciary guidance

The sheer scale of the new rules, particularly Regulation Best Interest, which requires broker-dealers to put their retail clients' investment interests ahead of brokers' profit motives, will leave firms scrambling to implement new practices and compliance oversight in the next 11 months.

"My gut level feeling for broker-dealers is you are already behind schedule," said Fred Reish, chair of Drinker Biddle's Financial Services ERISA Team and chair of the Retirement Income Team. "There is so much there, it's going to be really hard to get in compliance."

Recommendations on annuities, or a third-party money manager—routine acts under the existing suitability standard for brokers—are two examples Reish sited that will potentially confound firms that will need to implement new policies, software that supports compliance with Reg BI, and firm-wide training for sellers of securities and annuities.

Broker-dealers will be beholden to the four new requirements under Reg BI—the Disclosure, Care, Conflict of Interest, and Compliance Obligations. Those requirements will have to be met irrespective of whether a broker-dealer offers the ongoing monitoring of a retail client's assets.

"Broker-dealers may not have been formally monitoring accounts, but may have been informally monitoring them," said Reish. "Some broker-dealers are now considering monitoring as part of the contractual obligations."

Registered Investment Advisers too will have compliance challenges, despite the SEC's Investment Adviser Interpretation rule that governs fiduciaries being less onerous than Reg BI.

"RIAs still have to pay attention," said Reish. "If you recommend an IRA transfer, and that results in a benefit to the RIA, there is a conflict of interest. Where is that disclosed? In the Form ADV?"

James Lundy, a partner in the firm and member of its SEC & Regulatory Enforcement Team, noted that fiduciaries already operate under a duty to monitor their clients' assets.

"That is an active duty," he said of RIAs' obligations. "But with wrap accounts, monitoring may not be active. We are seeing examiners reassess whether it is appropriate for clients to be in wrap accounts if they are not active. Firms should look closely at that."

Some critics of Reg BI have suggested that dual-registered broker dealers will be able to side-step compliance by simply shifting to their "RIA hat" when selling securities to retail investors.

But Reish suggested it would not be that simple.

"What about dual registrants? They will have to give both (CRS) disclosures, look at both types of accounts, and recommend the best interest account from one or the other. You can't just say you are an RIA," said Reish.

Under the SEC's final rules, the Form CRS relationship summary will have to include information about the services being offered, fees and costs, conflicts of interest, the legal standard of conduct the firm member is operating under, and whether the firm and its representatives have any disciplinary history.

Form CRS applies to both broker-dealers and investment advisers, and cannot be longer than two pages. Dual registrants can give four pages of Form CRS disclosures. Firms can link to additional disclosure papers, and they will have to also link to the SEC's investor education website.

"There are 60 pages of instruction on how to complete a two-page form," noted Grannum. "It will be a challenge."

For firms that risk falling behind the eight ball over the ensuing 11 months, one ironic Hail Mary could come from House Democrats who generally regard broker-dealers with a jaundiced eye.

House Financial Services Committee Chairwoman Maxine Waters, D-CA, was successfully able to attach an amendment to recent appropriations legislation that would defund the SEC's ability to enforce Reg BI.

But that will likely not survive in the Senate, said Brad Campbell, a partner in the firm's Employee Benefits and Executive Compensation Group.

"I don't think the SEC will be hindered from enforcing its rules," said Campbell, who noted that the defunding measure could possibly survive as Congress scrambles to pass legislation funding the government for the next fiscal year. "It's a credible threat, but I doubt it will happen in the final analysis."

Reish was less circumspect on Rep. Waters' defunding measure surviving in the Upper Chamber. "The odds of it getting through the Senate are nil," he said.

The bottom line for broker-dealers and RIAs: Delay is not an available option.

"This is huge," added Reish. "The first thing a firm should do is sit down with your attorneys. My general view is that people don't realize how much has to be done, and how short one year is."

Read more: 

• How SEC Chair Clayton answered 7 criticisms of Reg BI, IA fiduciary guidance
• Suitability plus? Lawyers say SEC proposal lacks clarity
• CFA Institute says SEC has immediate authority to clarify broker roles