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The Markets Monthly Review (As of 6/30/19)

The second quarter was full of ups and downs for stocks as investors had plenty to worry about. Throughout the quarter, the trade war between the United States and China ebbed and flowed as news continuously changed from positive to negative. Employment was steady and the unemployment rate remained low, but wage growth was moderate at best. Manufacturing and industrial production hit a snag during the second quarter, as did business fixed investment.


April saw stocks post solid returns as each of the benchmark indexes listed here enjoyed gains of at least 2.5%. The yield on 10-year Treasuries increased by 10 basis points as prices fell. A solid start to corporate earnings season helped support stocks, as did low interest rates and weak consumer price pressures. The March labor report helped quell investors’ fears, as almost 200,000 new jobs were added. As to the major indexes listed here, the Nasdaq led the way, gaining over 4.7%, followed by the S&P 500, which closed the month up by almost 4.0%. The small caps of the Russell 2000 and the Global Dow each rose by nearly 3.3%. The Dow, while pulling up the rear, still gained over 2.5% by the end of April.

did you know?

Cybersecurity continues to be a key area of focus for regulators and a common shortfall to be aware of in your firm. The SEC released risk alert on the use of data storage in May, recognizing three key areas of concern:

1. Misconfigured network storage solutions

2. Inadequate oversight of vendor-provided network storage solutions

3. Insufficient data classification policies and procedures

View the risk alert for more information

bright ideas
Reg BI and Your Business:
Highlights and Take-Aways from the SEC Best Interest Ruling

As we anticipated in our April newsletter, the SEC commission ruled 3-1 to enact the new best interest policy on June 5. The Regulation Best Interest will implement a new package of rulemaking to enhance transparency between broker-dealers and investment advisors to end clients, including what services are being provided and compensation for each.

What Is Regulation Best Interest (Reg BI)?

There are three main areas this regulation is intended to address:

1) Enhance investor protections while preserving investors’ access and choice

2) Clarify what services you are providing

3) Identify how you are paid for these services

To achieve these things, there will be substantially enhanced suitability requirements for broker-dealers starting June 30, 2020. While these requirements will not be as arduous as those proposed under the former DOL fiduciary rule, the SEC has identified the following obligations:

  • Disclosure obligation: The broker-dealer must disclose material facts about the relationship and recommendations including specific disclosures about the capacity in which the broker is acting, fees, the type and scope of services provided, conflicts, limitations on services and products, and whether the broker-dealer provides monitoring services.
  • Care obligation: The broker-dealer must establish, maintain, and enforce written policies and procedures reasonably designed to identify and at a minimum disclose or eliminate conflicts of interest (as investment advisors have been held previously).
  • Conflict of Interest Obligation: The broker-dealer must establish, maintain, and enforce written policies and procedures reasonably designed to identify and at a minimum disclose or eliminate conflicts of interest. This includes eliminating sales contests, sales quotas, bonuses, and non-cash compensation.
  • Compliance Obligation: Broker-dealers must establish, maintain and enforce policies and procedures reasonably designed to achieve compliance with Regulation Best Interest as a whole.

How This Impacts Beacon Advisors
Stand-alone IAs or RIAS will not be impacted under this new rule as they have already been meeting these standards; however, advisors operating under multiple hats, such as dually-licensed registered reps/investment advisors, will now have to disclose any potential conflicts as they act in these different capacities to meet these four areas of obligation.

Form CRS Relationship Summary
Reg BI also introduced a new annual form filing for RIAs and BDs intended to provide retail investors with a simple, easy-to-understand and uniform document that summarizes the nature of the relationship, including:

  • Services
  • Fees
  • Conflicts of interest
  • Legal standard of conduct
  • Disciplinary history

Starting June 30, 2020, this form must be provided at the beginning of an investment relationship to new clients and annually alongside privacy policies, ADVs and access to prospectuses. Existing clients will need to receive Form CRS within 30 days from the date it is filed online. This content is not much different from what is currently on Form ADV 2A, but the SEC indicated that the goal for Form CRS is to provide this information in a standardized way to make it easier for retail investors to compare investment advisors and broker-dealers.

What’s Next

There have been some attempts from the House of Representatives to block this ruling; however, we don’t see any changes or an overturn being likely at this point. Regardless, at Beacon we advise all advisors to proceed with making preparations for Reg BI to go into effect next summer. Meeting the obligations outlined above as well as delivering Form CRS will be checklist items regulators will be looking for and enforcing.

For questions or additional resources on how to prepare your business for Reg BI, contact your wholesaler today!

beacon news

Following our recent announcement of being recognized on the 2019 FT 300 Top RIA list, we received an overwhelming response of support and inquiries about how to leverage this news with your clients.

Please feel free to use the resources below to share with your database as a credibility-enhancing tool!

Thank you again for your dedication and being a critical part of this accomplishment!


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For Advisor Use Only, Not to Be Used With Clients

The GIPS Compliant Presentations for our Vantage portfolios can be obtained by clicking on the below link.  If you would like the Compliant Presentations to be emailed directly via PDF file or if you would like to receive a copy of Beacon’s Composite Descriptions; please respond to this email or contact Beacon at 937-439-9093.

BCM 2017 Compliant Presentations

Beacon Capital Management, Inc. is a registered investment adviser with the Securities and Exchange Commission. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Past performance is not indicative of future performance.

Additional information about Beacon Capital Management is also available on the SEC’s website at under CRD number 120641. Beacon Capital Management only transacts business in states where it is properly registered, notice filed, or excluded or exempted from registration or notice filing requirements.

The Financial Times 300 Top Registered Investment Advisers is an independent listing produced annually by the Financial Times (June 2019). The FT 300 is based on data gathered from RIA firms, regulatory disclosures, and the FT’s research. The listing reflected each practice’s performance in six primary areas: assets under management, asset growth, compliance record, years in existence, credentials and online accessibility. This award does not evaluate the quality of services provided to clients and is not indicative of the practice’s future performance. Neither the RIA firms nor their employees pay a fee to The Financial Times in exchange for inclusion in the FT 300.

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Beacon Capital Management

7777 Washington Village Drive, Suite 280, Dayton, OH 45459

P: 866.439.9093 | F: 937.424.4825