Tr?id=566623520170033&ev=PageView&noscript=1

Ä¢¹½´«Ã½

SEC Releases Final Reg BI Staff Bulletin Addressing Duty of Care

Posted on April 27th, 2023 at 1:45 PM
SEC Releases Final Reg BI Staff Bulletin Addressing Duty of Care

From the desk of Jim Eccleston at Ä¢¹½´«Ã½ 

The Securities and Exchange Commission (SEC) recently published a final staff bulletin on Regulation Best Interest (Reg BI), this time highlighting the “duty of care”, with the goal of definitively outlining financial advisors’ ethical responsibilities. 

The guidance, which is not a new regulation, follows two previous Reg BI staff bulletins on account recommendations and managing conflicts of interest. According to the bulletin, financial advisors have a duty to fully understand the “potential risks, rewards, and costs associated with a product, investment strategy, account type or series of transactions.” Specifically, understanding an investment involves evaluating its objectives, costs, characteristics, risk, expected returns, and potential losses. Financial advisors also are required to have “a reasonable understanding of the specific retail investor’s investment profile, which generally includes the retail investor’s financial situation (including current income) and needs; investments; assets and debts; marital status; tax status; age; investment time horizon; liquidity needs; risk tolerance; and any other information the retail investor may disclose”, according to the SEC.

Finally, adhering to Reg BI’s duty of care requires financial advisors to record a list of “reasonably available alternatives” to recommended investments. While financial advisors will not be responsible for considering every conceivable option, the breadth of alternatives “will depend on the facts and circumstances, including but not limited to the nature of the firm’s business, the retail investor’s investment profile, the scope of its relationships with its customers and clients and the reasonable availability of alternative investments or investment strategies”, the SEC noted.

 

Ä¢¹½´«Ã½ LLC represents financial advisors and investors nationwide in securities, employment, transition, regulatory and disciplinary matters.

 

Tags: eccleston, eccleston law

Return to Archive

TESTIMONIALS

Previous
Next
Quotes Bigger

Fantastic news!!!!  Your professionalism, support and expertise were greatly appreciated.  You made a difficult situation much more bearable.

Marci M.

LATEST NEWS AND ARTICLES

1787157891 Law
August 19, 2026
Former UBS Financial Advisor Suspended and Fined Over Unauthorized Trading Allegations

The Financial Industry Regulatory Authority (FINRA) suspended a former UBS Ä¢¹½´«Ã½alth Management USA broker for three months and fined him $10,000 after finding that he executed hundreds of trades in two customers' accounts without the required written authorization.

1787156982 Law
August 19, 2026
FINRA Suspends Former Gradient Securities Advisor

The Financial Industry Regulatory Authority (FINRA) has suspended former Gradient Securities representative Mark J.

1787070589 Law
August 18, 2026
Senior Protection Case Study: Edward Jones and Senior Investor Safeguards

A recent incident involving Edward Jones illustrates how challenging it may be to employ safeguards for protecting older clients from financial exploitation.