What is Regulation Best Interest (Reg BI)?

Reg BI is a rule issued by the SEC that went into effect June 30, 2020 that requires broker-dealers and their associated persons to act in the best interest of the retail customer at the time an investment recommendation is made, without placing the financial or other interest of the broker-dealer ahead of the interests of the retail customer.  This higher standard of conduct applies when recommending:

  • Securities transactions; or
  • Investment strategies involving securities, including account types; or
  • Opening IRA or brokerage account; or
  • Rolling over assets from one account type to another

The rule also requires broker-dealers to identify potential conflicts of interest and financial incentives the broker-dealer may have in making these types of recommendations in a Form CRS (Customer Relationship Summary).