The following Op-Ed was originally published in Morning Consult on June 13, 2019.

The concept of a heightened standard of conduct for broker-dealers when providing personalized investment advice to consumers has been debated, studied and analyzed for decades. All the work finally bore fruit this week in the form of the finalized Regulation Best Interest (Reg BI). The new rule from the Securities and Exchange Commission (SEC) is robust and expansive and will directly enhance investor protection and contribute to increased professionalism among financial service providers.

It is undeniable that Reg BI will impose a materially heightened standard of conduct for broker-dealers when serving retail clients. While principles-based, the rule is specific with respect to the duty and obligations brokers owe to their clients, and what steps they must take to comply, including the obligation to eliminate, or disclose and mitigate, certain conflicts of interest.

Under Reg BI, recommendations no longer may be just suitable for the client, but rather they must be in the retail customer’s “best interest.” This means broker-dealers cannot put their interests ahead of the interests of the retail customer. Further, brokers will be held to this new standard under the robust examination and supervision regimes of the SEC and FINRA, as well as in FINRA’s arbitration forum.

Broker-dealers must also mitigate, and in some cases eliminate, financial conflicts of interest. Disclosure of a financial conflict alone also is not considered adequate, effectively holding broker-dealers to a higher standard than the one applicable to registered investment advisers today.

The new rule also requires broker-dealers to exercise reasonable “diligence, care and skill” in making recommendations. These principles are the core of a broker-dealer’s “Care Obligation” in Reg BI.

As it is written, the new standard — together with existing standards — addresses the intended principles, goals and protections of the former DOL fiduciary rule. Reg BI applies more broadly than the DOL fiduciary rule because it applies to all retail customer accounts, not just retirement accounts, and will allow the SEC to enforce a common standard across the industry. At the same time, it avoids the many shortcomings that were embedded in the DOL rule, such as those that threatened to lead to greater cost, less choice and fewer professional services and options for retirement savers.

The totality of these new, explicit regulatory requirements will require brokerage firms to dramatically enhance their supervisory and compliance regimes to the benefit of retail investors.

When coupled with the far more frequent regulatory exam rates for broker-dealers, SEC and FINRA enforcement and oversight, and the private right of action afforded to retail customers through FINRA arbitration, the result is a significantly higher standard to which broker-dealers will be held to account.

The original proposal, like any, had ample room for improvement, as noted by many of thousands of comment letters, including the one submitted by the Securities Industry and Financial Markets Association (SIFMA). It is clear the SEC took seriously the voluminous feedback received from the financial services industry, consumer advocates, legislators and everyday investors in making revisions. Of note, the conflict of interest obligation was substantially revised to further detail what the best obligation requires and to clarify a broker-dealers obligation to mitigate and eliminate conflicts of interest under various circumstances.

No doubt there will be many, varying opinions regarding the action by the SEC, but the duties, obligations and requirements placed on broker-dealers will be quite real. The costs to implement will be significant, but worthwhile to uniformly enhance investor protection to the level investors should and do expect.

Kenneth E. Bentsen Jr. is president and CEO of SIFMA, the voice of the nation’s securities industry. He is also chairman of the Global Financial Markets Association (GFMA), of which SIFMA is the U.S. regional member.

For more, visit SIFMA’s Best Interest Standard Resource Center