Category Archives: best interest

Best Interest Standard of Care for Advisors #23


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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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Best Interest Standard of Care for Advisors #22


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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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Best Interest Standard of Care for Advisors #21


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Regulation Best Interest: Rollover Recommendations and Mitigation of Advisor Incentives (Rollovers Part 7)

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.”

This is the 7th of my series of articles about rollover recommendations and rollover education under the SEC’s Regulation Best Interest and its Interpretation for Investment Advisers. (For the first six, see Best Interest for Advisors #’s 15, 16, 17, 18, 19 and 20.)

This article deals with the Reg BI requirement that broker-dealers mitigate the incentives that might induce their advisors to make rollover recommendations that are not in the best interest of participants. Specifically, that requirement (which applies on June 30, 2020) is:

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Best Interest Standard of Care for Advisors #19


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Regulation Best Interest: Rollover Recommendations for Investment Advisers (Rollovers Part 5)

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.”

This is the 5th of my series of articles about rollover recommendations and education under the SEC’s Regulation Best Interest and its Interpretation for Investment Advisers. (For the first four, see Best Interest for Advisors #’s 15, 16, 17 and 18.)

This article discusses the disclosure requirements for conflicts of interest involved in rollover recommendations by broker-dealers and investment advisers. Let’s start by pointing out why a rollover recommendation is a conflict of interest.

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Best Interest Standard of Care for Advisors #17


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Regulation Best Interest: Education vs. Recommendation (Rollovers Part 3)

The SEC has issued its final Regulation Best Interest (Reg BI), Form CRS Regulation, 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 #16, I pointed out that, if a broker-dealer’s advisor recommended that a participant rollover his or her benefits in a workplace retirement plan to an IRA, it would be subject to the best interest standard of care (when Reg BI applies on June 30, 2020). (Best Interest for Advisors #15 discussed the process and factors to be considered to make a best interest rollover recommendation.)

My last post then went on to discuss rollover education and information . . . as opposed to a rollover recommendation. If properly done, the education and information approach can be used by broker-dealers if they are concerned about the difficulty of gathering the information for a rollover recommendation and the process for evaluating that information.

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Best Interest Standard of Care for Advisors #16


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Regulation Best Interest: Education vs. Recommendation (Rollovers Part 2)

The SEC has issued its final Regulation Best Interest (Reg BI), Form CRS Regulation, 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 #15, I discussed the “best interest” standard for broker-dealers and their advisors and how it applies to rollover recommendations. (Keep in mind that Reg BI doesn’t apply until June 30, 2020.)

Until then the suitability standard applies and it only covers recommendations that involve securities transactions, for example, recommendations to rollover from a 401(k) plan, which requires that a participant liquidate the securities in his 401(k) account. When Reg BI applies, all rollover recommendations from all plans (e.g., including pension plans—where the participant doesn’t liquidate investments in order to rollover and non-ERISA plans, such as government plans).

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Best Interest Standard of Care for Advisors #15


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Best Interest: Rollover Recommendations (Part I)

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.”

This article discusses how the Care Obligation in Reg BI applies to recommendations to roll over accounts in 401(k) plans to IRAs. When Reg BI applies, beginning June 30, 2020, rollover recommendations to participants in “workplace retirement plans” will be subject to the Best Interest standard.

It’s important to note, though, that Reg BI still permits education and information that stops short of being a recommendation. However, the education and information cannot be a disguised recommendation.

Continue reading Best Interest Standard of Care for Advisors #15 →

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