Ask the Hammer: What Does Reg BI Mean for Investors?

Robert Powell, CFP®

In June, the Securities and Exchange Commission (SEC) voted to adopt a package of rulemakings and interpretations designed, according to a press release, "to enhance the quality and transparency of retail investors’ relationships with investment advisers and broker-dealers, bringing the legal requirements and mandated disclosures in line with reasonable investor expectations, while preserving access (in terms of choice and cost) to a variety of investment services and products."

Specifically, the SEC said these actions include new Regulation Best Interest, the new Form CRS Relationship Summary, and two separate interpretations under the Investment Advisers Act of 1940.

Individually and collectively, the SEC said these actions are "designed to enhance and clarify the standards of conduct applicable to broker-dealers and investment advisers, help retail investors better understand and compare the services offered and make an informed choice of the relationship best suited to their needs and circumstances, and foster greater consistency in the level of protections provided by each regime, particularly at the point in time that a recommendation is made."

In a video interview, Jeffrey Levine of Buckingham Wealth Partners, shared his views about the new regulation and rules.

"For the most part, it requires that professionals act in your best interest when dispensing advice," Levine said in this episode of Ask the Hammer. "However, what it doesn't do is just as important; it does not make everyone a fiduciary. There still are key differences between the rules that individuals are subject to under Reg BI and being a true fiduciary all of the time."

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