Which statement describes Regulation Best Interest's approach to standards for brokers and investment advisers?

Which statement describes Regulation Best Interest's approach to standards for brokers and investment advisers?

• A. It maintains two different standards with an enhanced suitability standard for brokers
• B. It creates a single best interest standard for both
• C. It states advisers and brokers are fiduciaries at all times
• D. It eliminates care obligations

Answer: (A)

Regulation Best Interest keeps two separate standards of conduct depending on the type of advisor. For brokerage firms, the rule raises the obligation from merely being suitable to acting in the client’s best interest when making a securities recommendation—a stronger, enhanced form of the traditional suitability standard. For investment advisers, the fiduciary duty under the Advisers Act remains in effect, requiring advisers to act in the client’s best interest at all times. Because of this separation—brokers under an enhanced suitability/best-interest standard and advisers under a fiduciary standard—Reg BI does not unify them into one standard.

Regulation Best Interest keeps two separate standards of conduct depending on the type of advisor. For brokerage firms, the rule raises the obligation from merely being suitable to acting in the client’s best interest when making a securities recommendation—a stronger, enhanced form of the traditional suitability standard. For investment advisers, the fiduciary duty under the Advisers Act remains in effect, requiring advisers to act in the client’s best interest at all times. Because of this separation—brokers under an enhanced suitability/best-interest standard and advisers under a fiduciary standard—Reg BI does not unify them into one standard.