What is the Best
THE DEVIL'S IN THE DETAILS.
Many of the terms used in Reg-
BI, like "Best Interest" are not
explicitly defined within the
Best interest and meeting compliance with Reg-BI will be defined
by court cases from violations and lawsuits and will constantly
Reg-BI intends to address and
update an entire industry.
DOL'S FIDUCIARY RULE STANDARD Reg-BI is the
replacement for the Department of Labor's Fiduciary Rule,
nixed in 2017.
There are many similarities
between the regulations and
the DOL certainly inspired parts
By the DOL's language a fiduciary's obligation to carry out its duties is done so "Prudently" when they
follow a "Procedurally prudent" process by: gathering relevant information, considering all available
courses of action, consulting experts where appropriate, and making a reasoned decision based
The Fiduciary Rule is by many standards
a more strict regulation, so meeting
these fiduciary obligations will certainly
place most BDs and RIAs within their
Reg-BI due diligence standards.
REG-BI EXPANDS ON FINRA'S SUITABILITY STANDARD
Brokers must currently adhere to FINRA's suitability standard of
care with clients, and RIAs must uphold a fiduciary standard of
As the table below shows,
Reg-BI is not that different
from FINRA's rule.
BEST INTEREST ACCORDING TO A FINANCIAL LAWYER We
consulted with a financial attorney, Michael Kreps , who has advised on
regulation, to give his analysis of Reg-BI and its terminology.
With a whole new set of obligations
to follow, Reg-BI, for BDs and RIAs,
clients will be made aware of this
change in accepted standards.
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