Regulation Best Interest

SIFMA strongly supports the U.S. Securities and Exchange Commission’s Regulation Best Interest (Reg BI) — a heightened, principles-based standard that raises the bar for broker-dealers when serving retail clients.

Since 2009, SIFMA has consistently advocated for a uniform best interest standard across financial professionals providing investment advice. In June 2019, the SEC adopted Reg BI by a 3–1 vote, requiring broker-dealers to act in the best interest of retail customers when recommending any securities transaction or investment strategy.

The rule, along with the related Form CRS Relationship Summary, enhances transparency by providing clear, plain-language disclosures to help investors understand the nature of their relationships with financial professionals. Reg BI became fully effective on June 30, 2020.

Key Focus Areas

Elevating the Standard of Conduct

Reg BI imposes a materially higher standard of conduct for broker-dealers. It requires firms to identify, disclose, and mitigate conflicts of interest, and to place investors’ interests ahead of their own when making recommendations.

“As written, the SEC’s Regulation Best Interest rule 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. It is undeniable that this rule will directly enhance investor protection and contribute to increased professionalism among financial service providers,”

— Kenneth E. Bentsen, Jr., President and CEO, SIFMA

Supporting Implementation and Compliance

Compliance with Reg BI has required significant operational, training, and systems updates across the industry. SIFMA continues to support firms in their implementation efforts, working closely with the SEC and FINRA to ensure consistent interpretation and effective examination practices.

Enhancing Investor Protection and Choice

SIFMA believes Reg BI strikes the right balance – enhancing investor protection while preserving investor access to choice in advice, products, and compensation models. The standard improves accountability and professionalism without limiting investors’ ability to select the type of relationship that best meets their financial goals.

The Bottom Line

Regulation Best Interest represents a major step forward in strengthening investor protection and elevating industry standards. SIFMA continues to work with regulators and member firms to support effective implementation and ongoing improvement of the Reg BI framework – advancing trust, transparency, and investor confidence in the marketplace.