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Advocacy in action blog

The Securities and Exchange Commission (SEC) today voted to finalize Regulation Best Interest (Reg BI), which significantly enhances the standard of care that broker-dealers (BDs) and their registered representatives (RRs) owe their clients. The standard contained in Reg BI exceeds the existing suitability standard by requiring BDs and their RRs to act in the best interests of their clients when recommending any securities transaction or investment strategy involving securities, without placing the interest of the BD or RR ahead of the interests of the client. In connection with Reg BI, the Commission also adopted a new client relations summary disclosure requirement known as Form CRS, and issued an interpretation of the fiduciary duty requirements that registered investment advisers must follow.

“The new best interest standard addresses perceived shortcomings in consumer protection without placing undue barriers between insurance and financial professionals and their clients,” said Kevin Mayeux, CEO of the National Association of Insurance and Financial Advisors. “The higher standard of care preserves the ability of Main Street investors to receive needed products, services, and advice by not favoring one business model over another. It allows them to choose financial professionals who best fulfill their needs and to compensate those professionals in a way that works best for them, whether through commissions or fees.”

NAIFA has supported the SEC adopting a regulation requiring financial professionals to work in the best interests of their clients. As a key party in the lawsuit that struck down a Department of Labor rule that would have imposed a fiduciary duty on professionals providing retirement services and advice, NAIFA has argued that the SEC has the necessary expertise and is the proper authority to regulate financial professionals and establish rules governing their relationships with clients.