What do COVID-19 and Reg BI have in common?

The current COVID-19 pandemic and the SEC’s new Reg BI ruling present major challenges for many organizations. But other than that, what do they have in common?
Evelyn Wolf
4 min read

Answer: plain language and clear communications.

It’s critical for both. Let’s explore how.

The importance of clear communications in times of crisis

Emotion is the most important dimension of customer experience quality.” – Getting Digital Customer Experience Right Amid the Pandemic – Forrester

This quote is from research analyst firm Forrester’s article on Getting Digital CX Right Amid The Pandemic. It covers a topic we’ve written about extensively. That, especially when emotions run high, you need to approach CX with empathy. And this is certainly true when it comes to communicating now, through the current COVID-19 pandemic.

People are anxious, likely struggling with some of the following questions:

  • Am I safe?
  • Is my family safe?
  • What will my future hold?
  • Are my investments secure?

When people are feeling fragile, they need constant reassurance. Clear communications achieve that and are therefore key to building trust.

What is Reg BI?

The SEC’s Regulation Best Interest (Reg BI) is a new rule that comes into effect on 30 June 2020 for financial services. It applies to broker-dealers and registered investment advisers, who will need to create a new “Form CRS” for investment services and products. These new disclosures must cover:

  • Services
  • Fees
  • Conflicts of interest

And they must be written in plain English.

The SEC (Securities and Exchange Commission) realized the importance of clear communications too when it comes to financial matters. Just like we are seeing during the COVID-19 pandemic, the SEC knows that individuals need clear, plain English communications. Especially when they make important financial decisions.

Clarity and your cognitive load

Whatever industry you work in, you really need to embrace clarity at the moment. We have limited mental capacity to process information (see our blog on cognitive load theory). The more our brain needs to work, the harder it is to understand the message. So in times of crisis and uncertainty, our cognitive load is already higher than usual. Using jargon-laden, institutional language adds further barriers to our understanding. It diminishes effective communication.

Crisis communications in Healthcare

“In a crisis, people take in, process, and act in information differently than they would outside of an emergency. Effective communication during a crisis should be clear.” – CDC

What’s more, crises usually come with their own special breed of complexity. Just look at some of the medical jargon that we’ve seen during the COVID-19 outbreak:

  • Epidemic/pandemic (do most people understand the difference?)
  • Antigen / antibody
  • PPE

And beyond medical terminology, we’re also seeing overly complex words used a lot within press communications. Take this example from a CNBC article:

“Federal health officials say respirator masks can be used for eight hours of continuous or intermittent use and should be discarded after treating an infected patient.”

We scanned this sentence through VT Writer. The reader would need almost 16 years of education to understand it. The average grade level in the US is 8. Some important messages around the pandemic are likely not accessible for the general population. Including vulnerable groups, like the aged and people with underlying health conditions.

And this isn’t only true of communications around healthcare.

Clear communications and the financial industry

This year’s Edelman Research shows that trust remains at an all-time low within the financial industry. Even before the COVID-19 crisis, we desperately needed clarity. And yet few organizations in financial services are simplifying their language.

For example, the Financial Times recently reported on the steps regulators are taking in response to market concerns. One of these steps includes giving companies more time to publish their accounts. One regulator said:

“We urge market participants not to draw undue adverse inferences when companies make use of the extra time…For a great many companies it will be a sensible decision to make in unprecedented times.”

Even this sentence is too complex. How can we tell? After running it through VT Writer we can see:

  • It scores at a grade level of 18 (this is a proxy for cognitive load, the higher the number, the more complex it is)
  • It includes complex words that many in the general population would struggle to understand (“participants”, inferences”, “unprecedented”)

Embracing plain language has never been more necessary. And, for broker-dealers and advisers, the SEC’s new Reg BI rule makes it mandatory.

How Reg BI helps advisers embrace plain language

The SEC has offered good guidance on how to communicate clearly. Just look at their plain language handbook, as well as the Reg BI rule itself. Both advise you to:

In general, they recommend writing content at grade 8 level. But, when topics are emotive and you want to appeal to a broad audience, try writing at an even lower grade level. It means your messages have a better chance of cutting through the noise (remember cognitive load theory).

Beyond our 2020 vision

Returning to Forrester’s report on CX during the pandemic, their advice is to:

In this period of uncertainty, clear communications are key to building trust. Financial organizations have an additional duty to embrace plain language, with the lack of industry trust as well as the looming Reg BI deadline. But on a positive note, those who do embrace plain language gain a competitive advantage. As they communicate to a wider audience more effectively.

So, now you see the connection. COVID-19 and Reg BI have plain language in common. They are external forces that mean that now more than ever, it makes sense for organizations to simplify their language.

More generally, clear communications promote customer loyalty and trust. Plain language shouldn’t feel like a tick-box exercise as a result of a new Rule like Reg BI, it’s bigger than that. Embrace clear communications now, and look forward to less confusion, more trust, happier customers, and better retention rates going forward.


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