By Brad Sanders, CFP®, CRPC®

What does it mean to be a Financial Advisor? New rules introduced by the SEC in June of 2019 called Regulation Best Interest (Reg BI) go into effect on June 30, 2020, and part of the scope of the rules defines who can be considered a Financial Advisor.

Reg BI intends to shed light on the often-murky relationship between clients and industry professionals. This allows investors to recognize the difference between receiving advice and being sold a financial product. The communications clients receive in the coming days will provide more clarity to those who may not realize the scope of their relationship or how their advisor is compensated.

As a reminder, when you engage with an advisor who is a CFP® professional, or you have your assets managed in an advisory capacity, your advisor is held to a fiduciary standard that ensures he or she acts in your best interest.

Below are a few takeaways as well as additional resources:

  • Firms must comply with Reg BI by June 30, 2020.
  • Compliance with Reg BI will not change the nature of the relationship you have with your advisor at Stonebridge Financial Group. It will create some additional disclosures we will provide to existing clients.
  • Reg BI intends to protect retail investors and clarify that these rules cover all recommendations given by a licensed individual. They are designed to ensure customers understand all material facts surrounding the recommendations they receive.
  • The SEC will require both broker-dealers and investment advisors to provide a summary of their relationship to retail clients. They will do this through the newly created Form CRS, which existing retail clients as well as potential clients will receive going forward.
  • Only advisors holding licenses that allow them to be paid for advice (such as the Series 63, 65 or 66), or who have a professional designation such as CFP®, will be allowed to use the title “Financial Advisor” going forward.

For additional information about Reg BI, please visit the following resources:

Brad SandersBrad Sanders has been a lifelong resident of Central PA. He began in the financial services industry in 2007. Prior to that, he attended St. Vincent College in Latrobe, PA where he was also a member of the baseball team. He earned his Certified Financial Planner® certification in 2012 and his Chartered Retirement Planning Counselor® designation in 2013.