Regulation Best Interest (Reg BI)

If your broker recommended an investment that seemed to do more for them than for you, there is a federal rule that was meant to protect you. It is called Regulation Best Interest — or Reg BI — and since 2020 it has required brokers to put your interests ahead of their own whenever they recommend an investment or strategy.

The Rules Are on Your Side

You were never expected to know securities regulations. That is exactly what Reg BI is for. It sets a clear standard for how a broker must treat you, and when they fall short of it, the responsibility is theirs — not yours. Figuring out whether that happened in your case is our job.

What Regulation Best Interest Requires

When a broker recommends an investment to an everyday customer, Reg BI holds them to four core obligations:

• Care — using real diligence, care, and skill, and weighing the costs and the reasonable alternatives before recommending anything
• Disclosure — telling you, in writing, about the relationship, the fees, and any conflicts of interest before or when they make the recommendation
• Conflict of interest — identifying and managing conflicts, and not letting sales contests or incentives drive what they steer you into
• Compliance — having real policies and procedures in place to follow the rule

And there is one thing a broker cannot do: satisfy Reg BI through disclosure alone. Simply mentioning a conflict does not excuse putting their interests ahead of yours.

How Reg BI Changed the Rules for Brokers

Before Reg BI, a broker only had to recommend investments that were suitable for you. Reg BI goes further — the recommendation has to be in your best interest, and the broker has to weigh what it costs and whether there was a better option. It builds on FINRA’s older suitability rule, but it sets a higher bar. (Investment advisers are held to a separate, even higher fiduciary standard — see Breach of Fiduciary Duty.)

Signs a Broker May Have Violated Reg BI

• You were put into a high-cost product when cheaper, comparable options existed
• You were never told about the fees or the conflicts of interest before you invested
• The recommendation seemed driven by the broker’s commission, not your goals
• You were moved from one account or product to another with no clear benefit to you
• What you were sold did not match the goals or the risk level you had described