Regulation Best Interest - Executive Summary

Posted by Communications Staff on Jul 2, 2019 2:50:52 PM

Recently, the SEC recently released a series of new rules including the Regulation Best Interest rule (Reg BI) that is currently scheduled to go into effect in 2020. The entire rules and guidance package approved June 5 by the SEC comes out to nearly 1,400 pages.  The Institute has distilled the voluminous package for your benefit into the six-page executive summary linked below. The Institute's Exceptional Advisor Podcast also published a special edition episode on Regulation BI. Theses two resources should provide you with an objective overview of the two rules approved by the SEC – Reg BI and Form CRS – and two updated interpretative positions, one summarizing core components of the fiduciary standard for investment advisers and the other clarification of the solely incidental exemption for brokerage firms.  

As a professional association, with a core emphasis on education, our goal is to  synthesize theses rulings in a digestible manner to help you comply with the rulings.  We provided these insights when DOL Fiduciary was the lay of the land, and we will continue to help you understand how new regulations affect you, your practice, and your clients.

In this spirit, it is worth noting that whether you are regulated as a broker rep or an advisor rep, you as a member of the Institute are already required to meet the principles outlined through the Investments & Wealth Institute Code of Professional Responsibility. REG BI puts in place four obligations that align with most of the principles in your Code, most notably Code Principles 1,2,3, 7 and 8.

      1.    Act in the best interest of the client.

      2.    Disclose services to be offered and provided, related charges, and compensation.

      3.    Disclose the existence of actual, potential, and/or perceived conflicts of interest and relevant financial relationships, direct and/or indirect. Take appropriate action to resolve or manage any such conflicts.

     7.    Provide competent service by truthful representation of competency, maintenance and/or development of professional capabilities, and, when appropriate, the recommendation of other professionals.

     8.    Comply with legal and regulatory requirements related to one’s practice of his or her profession.

REG BI is a large and robust change to existing SEC rules for broker-dealers and their reps. Our resources to help you stay educated on this new regulation will continue throughout the coming weeks and months, so please stay tuned!

Download Executive Summary

Topics: financialpodcast

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