Best Interest Standard of Care for Advisors #27

Regulation Best Interest, RIA Interpretation and Consideration of “Account Types” (Part 3)

The SEC has issued its final Regulation Best Interest (Reg BI), Form CRS Rule, RIA Interpretation and Solely Incidental Interpretation. I am discussing the SEC’s guidance in a series of articles entitled “Best Interest Standard of Care for Advisors.”


Regulation Best Interest (Reg BI) and the Interpretation Regarding Standard of Conduct for Investment Advisers (RIA Interpretation) require that broker-dealers  and investment advisers evaluate the “account types” their firms offer—in light of the investor’s investment profile—to make a best interest recommendation. In other words, both types of firms, and their advisors, must first consider the account type that is appropriate for the investor.

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The DOL’s Fiduciary Rule: Will We Get a New Rule?

by Brad Campbell and Fred Reish

As you may know, the Department of Labor has included the proposal of a new fiduciary rule on its Regulatory Agenda. The Agenda indicated that it would be issued in December of last year. But, of course, it hasn’t.

That raises the question of, if we get a proposed regulation in the near future, will it ever become a final rule?

Of course, if the current Administration wins the Presidential election, the proposed regulation would ultimately be adopted in final form (perhaps with some minor changes). However, if the White House changes parties after this November’s election, there may not be enough time for a regulation to be proposed and finalized. Here’s why.

There are several ways that a new, incoming Administration can stop a regulation from the prior Administration.

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Best Interest Standard of Care for Advisors #26

Regulation Best Interest: Recommendations of Account Types (Part 2)

The SEC has issued its final Regulation Best Interest (Reg BI), Form CRS Rule, RIA Interpretation and Solely Incidental Interpretation. I am discussing the SEC’s guidance in a series of articles entitled “Best Interest Standard of Care for Advisors.”


In my last post (Best Interest for Advisors #25), I discussed the SEC guidance for broker-dealers and investment advisers on recommendations of account types. The article explained that investment advisers are subject to the best interest standard for recommending account types (since July of last year) and broker-dealers will be subject to the new best interest rules for recommending account types (beginning June 30 of this year).

The focus of the article, though, was to define what an account type was. As the article explained, “account type” is to be interpreted very broadly and includes many programs and accounts that may not obviously be considered types of accounts. As a result, the first compliance step for broker-dealers and investment advisers is to identify all of the account types they offer. Then those firms can develop the processes for their advisors to consider the types of accounts (and compare different types of accounts) offered by the firm . . . in light of the investor’s needs. (The rules apply to retail customers of broker-dealers and all clients of investment advisers.)

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Best Interest Standard of Care for Advisors #25

Regulation Best Interest, RIA Interpretation and Consideration of “Account Types” (Part 1)

The SEC has issued its final Regulation Best Interest (Reg BI), Form CRS Rule, RIA Interpretation and Solely Incidental Interpretation. I am discussing the SEC’s guidance in a series of articles entitled “Best Interest Standard of Care for Advisors.”


Regulation Best Interest (Reg BI) and the Interpretation Regarding Standard of Conduct for Investment Advisers (RIA Interpretation) require that broker-dealers  and investment advisers evaluate the account types their firms offer—in light of the investor’s investment profile—to make a best interest recommendation. In other words, both types of firms, and their advisors, must first consider the account type that is appropriate for the investor. That raises the obvious question of “What is an account type?”

Before answering that question, let’s look at what the SEC said about the need to consider account types as a part of a best interest process.

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Best Interest Standard of Care for Advisors #23

Regulation Best Interest: SEC 2020 Examination Priorities—Examinations for Compliance With Reg BI and the Investment Adviser Interpretation

The SEC has issued its final Regulation Best Interest (Reg BI), Form CRS Rule, RIA Interpretation and Solely Incidental Interpretation. I am discussing the SEC’s guidance in a series of articles entitled “Best Interest Standard of Care for Advisors.”

My last post on Best Interest for Advisors #22 discussed the FINRA 2020 Examination Priorities (https://www.finra.org/sites/default/files/2020-01/2020-risk-monitoring-and-examination-priorities-letter.pdf) provisions on examinations for compliance with Reg BI and Form CRS. This article discusses the SEC’s 2020 Examination Priorities (https://www.sec.gov/about/offices/ocie/national-examination-program-priorities-2020.pdf) provisions on compliance with Interpretation Regarding Standard of Conduct for Investment Advisers (“RIA Interpretation”) and Form CRS (as well as compliance by broker-dealers with Reg BI).

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SECURE Act and Guaranteed Income (Part 3)

The introduction to my last two posts, SECURE Act Part 1 and SECURE Act Part 2, explained:

There are two parts of the SECURE Act that I believe will have the greatest impact on my clients: plan sponsors and plan service providers. The first includes the provisions on retirement income, including the safe harbor for selecting a guaranteed income provider, the ability to distribute guaranteed income investments if a plan no longer want to offer those products, and a new requirement to give participants projection of their retirement income. The second impactful part is the authorization of Open MEPs (Multiple Employer Plans), which the law calls “PEPs” (or Pooled Employer Plans). That change will allow financial institutions to sponsor plans that can be adopted by multiple (or even many) unrelated employers, transferring much of the fiduciary responsibility onto the financial institution.

Part 1 discussed the fiduciary safe harbor for selecting an insurance company to provide the guaranteed retirement income products for defined contribution plans (e.g., 401(k) plans). Part 2 covered the common guaranteed products in 401(k) plans under the pre-SECURE Act rules.

This article talks about two practical issues: (1) the need for the guaranteed retirement income products to be on recordkeeping platforms, and (2) the role of plan advisors in helping 401(k) fiduciaries understand and select the insurance company and the product.

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Best Interest Standard of Care for Advisors #22

Regulation Best Interest: FINRA Examination Priorities—2020 Examinations for Compliance

The SEC has issued its final Regulation Best Interest (Reg BI), Form CRS Rule, RIA Interpretation and Solely Incidental Interpretation. I am discussing the SEC’s guidance in a series of articles entitled “Best Interest Standard of Care for Advisors.”


Among the priorities in FINRA’s 2020 Risk Monitoring and Examination Priorities Letter (https://www.finra.org/rules-guidance/communications-firms/2020-risk-monitoring-and-examination-priorities-letter) is examining the compliance readiness for Reg BI and Form CRS . . . and then, after June 30, examining compliance with those requirements. Here’s what the examination priorities letter says about that, including the questions that their examiners will ask:

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SECURE Act and Guaranteed Income (Part 2)

The introduction to my last post, SECURE Act Part 1, explained:

There are two parts of the SECURE Act that I believe will have the greatest impact on my clients: plan sponsors and plan service providers. The first includes the provisions on retirement income, including the safe harbor for selecting a guaranteed income provider, the ability to distribute guaranteed income investments if a plan no longer want to offer those products, and a new requirement to give participants projection of their retirement income. The second impactful part is the authorization of Open MEPs (Multiple Employer Plans), which the law calls “PEPs” (or Pooled Employer Plans). That change will allow financial institutions to sponsor plans that can be adopted by multiple (or even many) unrelated employers, transferring much of the fiduciary responsibility onto the financial institution.

That post then discussed the fiduciary safe harbor for selecting an insurance company to provide the guaranteed retirement income products for defined contribution plans (e.g., 401(k) plans).

This article talks about the types of guaranteed retirement income products currently found in 401(k) plans. Let me start by addressing two common areas of misunderstanding.

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