Regulation Best Interest
Chapters in this video
- 0:00 The Reg BI traffic lanes and retail vs. institutional customers
- 1:58 Account-type and rollover recommendations
- 3:08 The four component obligations framework
- 3:31 Disclosure and Care duties with cost comparison
- 5:06 Conflicts: eliminate product-specific incentives, permit production-based grids
- 6:24 Written supervisory procedures as umbrella compliance
- 7:01 Reg BI vs. suitability: four-point showdown
- 8:05 Rapid-fire exam recap
What this video covers
- The Reg BI traffic lanes: which customers are retail (natural persons, personal/family/household use) then which remain under the suitability rule
- Why account-type recommendations and rollovers such as 401(k)-to-IRA moves are covered by Reg BI, not just specific securities transactions
- The Disclosure Obligation: full written disclosure of capacity, fees, services, conflicts, and limitations, and why disclosure never cures a bad recommendation
- The Care Obligation and its three sub-prongs: understand risks/rewards/costs, have reasonable basis for best interest including cost comparison against alternatives, then prevent excessiveness in a series of transactions
- The Conflict of Interest Obligation: identify then mitigate or eliminate conflicts, and the mandatory elimination of product-specific sales contests, quotas, bonuses, and non-cash compensation within limited time periods
- Why production-based compensation on total gross commissions is permitted while product-specific incentives are banned
- The Compliance Obligation: written supervisory procedures, abbreviated WSPs, as an independent requirement that covers Reg BI as a whole
- Side-by-side Reg BI versus suitability on customer type, standard height, explicit cost consideration, and conflict treatment
Read the full lesson, free
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