Regulation Best Interest, adopted by the SEC in 2019, requires broker-dealers and their representatives to act in a retail customer's best interest when making a recommendation, and not to place their own interests ahead of the customer's.
The older suitability standard, which required a recommendation to be suitable but did not require the customer's interest to come first.
Disclosure of the relationship, services, fees, and conflicts. Care in forming the recommendation. Conflict of interest policies to identify and address conflicts. Compliance policies covering the whole thing.
Regulation Best Interest attaches at the point of a recommendation. An investment adviser's fiduciary duty applies to the whole relationship, continuously.
The standards have moved closer together. When each applies has not converged.
The rule came with a short relationship summary that both broker-dealers and advisers must deliver, describing services, fees, conflicts, and disciplinary history in a fixed format so a retail investor can compare firms.
Because clients will ask about the difference, and because dually registered firms operate under both depending on the capacity they are acting in.
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