Regulation Best Interest (Reg BI)
Regulation Best Interest – (Reg BI)
Regulation Best Interest imposes a new standard of conduct specifically for broker-dealers that substantially enhances the broker-dealer standard of conduct beyond existing suitability obligations. The standard of conduct draws from key fiduciary principles and cannot be satisfied through disclosure alone. It provides specific requirements to address certain aspects of the relationships between broker-dealers and their retail customers, including certain conflicts related to compensation.
When making a recommendation of a securities transaction or an investment strategy involving securities, a broker-dealer must act in the retail customer’s best interest and cannot place its own interests ahead of the customer’s interests. Regulation Best Interest, in an enhancement from the proposal, applies to account recommendations, including recommendations to roll over or transfer assets in a workplace retirement plan account to an IRA, and recommendations to take a plan distribution. It also applies to implicit “recommendations to hold” that result from agreed-upon account monitoring.
Investment advisers and broker-dealers will be required to deliver a relationship summary to retail investors at the beginning of their relationship. Firms will summarize information about services, fees and costs, conflicts of interest, legal standard of conduct, and whether or not the firm and its financial professionals have disciplinary history. The relationship summary will have a standardized question-and-answer format to promote comparison by retail investors in a way that is distinct from existing disclosures. The relationship summary will permit the use of layered disclosure so that investors can more easily access additional information from the firm about these topics. It also will highlight the Commission’s investor education website, Investor.gov, which offers the investing public educational information, including a series of educational videos designed to provide ordinary investors with some basic information about broker-dealers and investment advisers.
The purpose of this brochure (“Firm Disclosure Brochure) is to disclose the material facts relating to the scope and terms of a retail customer’s relationship with Andrew Garrett, Inc., (“ANDG or the “Firm”) and your Financial Professional (“FP”). These include, but are not limited to:
The investment philosophy of Andrew Garrett, Inc., and your FP.
The role of your FP and any limitations on the type and scope of services he/she may provide.
The services, investments, and types of accounts offered.
The costs associated with the services, investments, and types of accounts.
The risks associated with each type of investment.
The conflicts of interest Andrew Garrett, Inc. and your FP will have as it relates to providing these services, investments, and types of accounts.
This matrix gives examples of some possible conflict of interest that may exist.