Short answer
Regulation Best Interest (Reg BI) is the SEC standard of conduct requiring broker-dealers to act in a retail customer's best interest when recommending securities or account types. It has four obligations: disclosure, care, conflict of interest and compliance, and it came with the Form CRS relationship summary.
Regulation Best Interest (Reg BI) explained
Reg BI took effect on June 30, 2020. Broker-dealers must disclose material facts about the relationship and conflicts, exercise reasonable diligence and care in recommendations, identify and mitigate conflicts of interest, and maintain policies and procedures to comply. Form CRS gives retail investors a short summary of services, fees and conflicts.
Firms need evidence of why each recommendation was in the client's best interest, which pushes suitability data, rationale notes and disclosures into the CRM.
How Vantage Point helps: we build recommendation, disclosure and Form CRS delivery tracking into Salesforce Financial Services Cloud.
Frequently asked questions
Does Reg BI apply to investment advisers?
No. Reg BI applies to broker-dealers. Investment advisers owe a fiduciary duty under the Advisers Act.
What is Form CRS?
A short client relationship summary that broker-dealers and investment advisers give retail investors, describing services, fees, conflicts and disciplinary history.