Reg BI Disclosure Overview and Compliance Summary

Reg BI requires a broker to make many disclosures to a client. At its core, the disclosures need to be full and fair, in writing, of all material facts, and made at or before the time of recommendation. Though this video doesn’t cover every requirement or disclosure, it does hit some high points.

This is neither legal, financial, or regulatory advice. It is only rudimentary analysis from a layman.

Nature of Relationship:

Disclose to the client whether you are a broker or an advisor with every recommendation. IF you are only licensed as a broker, you may not want to call yourself an advisor as that may be misleading. Further, pay particular attention to any account monitoring you offer to ensure that you do not cross the line into an advisory relationship unless you intend to.

Material Fees and Costs:

Disclose to the client what each investment recommendation costs, as well as how those fees are broken out. What, and how, are you being paid? What does each account type cost? Will the costs increase if they accept a recommendation to move from one type of account to another such as when facing a rollover from a 401k to an IRA?

Type and Scope of Services:

The client needs to know if you are forced to make recommendations from a limited product menu. Are you required to recommend proprietary products? Are there are restrictions on investment strategies? The client will need to know all of these things so they can make an informed decision on which service provider, account type, and investments they’d like to use.

This is neither legal, financial, or regulatory advice. It is only rudimentary analysis from a layman.

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