Regulation Best Interest, or Reg BI, took effect in 2020 and changed what a broker-dealer owes a retail customer. It raised the old suitability standard to a best-interest standard, an improvement that nonetheless stops short of the fiduciary duty an investment adviser owes.
Reg BI is built on four obligations a broker must satisfy when making a recommendation to a retail customer. Disclosure: telling the customer the material facts about the relationship and conflicts. Care: exercising diligence to have a reasonable basis for the recommendation. Conflict of interest: identifying and addressing conflicts. And compliance: maintaining policies reasonably designed to achieve compliance with the rule as a whole.
A fiduciary duty, which advisers owe, is a broad and continuous obligation to act in the client's best interest across the relationship. Reg BI applies specifically at the moment of a recommendation to a retail customer. The practical gap has narrowed, but the standards are not identical, which is part of why the RIA-versus-broker distinction still matters.
Complying with Reg BI means real disclosures, a documented basis for recommendations, and conflict management, not just an attestation. It also connects to Form CRS, which retail firms must deliver. Building the process to satisfy all four obligations is the work.
A higher bar, not the highest one.
Greenridge L&C Advisors is a compliance consultancy, not a law firm. This is general information, not legal advice.