Regulation Best Interest (Reg BI) Overview

Regulation Best Interest (Reg BI) Overview

On June 30, 2020 new federal laws (known as Regulation Best Interest, or Reg BI for short) aimed at protecting investors went into effect. While many financial professionals are already acting in the best interest of their clients, Reg BI adds four requirements to help ensure investors are getting unbiased financial advice that meets their individual objectives:

Disclosure: Increasing transparency between clients and financial professionals, providing more information about fees, services and firm relationships.

Care: Ensures and documents that recommendations made by financial professionals are in the client’s best interest, particularly related to cost and benefits.

Conflict: Potential conflicts of interest on the part of the financial professional when making recommendations must be clearly identified and communicated to clients, and then mitigated against or eliminated if possible.

Compliance: Reg BI requires detailed documentation of recommendations and the rationale for them to ensure the best interest standard is met.

So what does this mean for you?

In the short-term: More mail. This summer all our clients received Form CRS (Customer Relationship Summary), which helps provide context for the financial services I offer. Going forward, clients will get an updated Form CRS anytime we discuss new recommendations to help achieve their financial goals. Clients with brokerage accounts will also receive an informational brochure from my Broker Dealer firm.

In the long-term: Continued service in your best interest. These disclosures change nothing about our relationship, and I will continue to manage and monitor your accounts. Reg BI is a federal safeguard to ensure all financial advisors make investment choices with their client’s personal interests first and foremost. For us, however, it’s business as usual. As registered financial advisors with FINRA, the International Association of Registered Financial Consultants and the Master Registered Financial Consultant Certification Board, we have professional designations that require continued education, professional transparency and ethical behavior towards our client base.