New York, NY securities attorney Jenice L. Malecki talks about the difference between Suitability and Regulation Best Interest (Reg BI). She explains that if a lawyer is only discussing suitability, investors should be cautious. Since June 2020, Regulation Best Interest (Reg BI) has become the governing standard, offering a higher level of protection than the prior suitability standard.

Many cases today involve long-standing relationships with brokers, creating situations that straddle the old suitability standard and the newer Reg BI requirements. Suitability historically meant that an investment aligned with the client’s age, risk tolerance, time horizon, investment objectives, and overall profile. Reg BI expands on this by imposing additional obligations on brokers, nearly resembling a fiduciary duty. Brokers must consider whether lower-cost or alternative products may better serve the client’s interests and assess if certain investments—such as illiquid private placements for elderly investors—are appropriate.

Reg BI also strengthens disclosure requirements regarding conflicts of interest and commissions, areas that were previously complex and difficult to monitor. In essence, Regulation Best Interest represents an evolution of the suitability standard, designed to better protect investors and ensure that recommendations truly align with their best interests.