Regulation Best Interest

Updated: Sep 11

Many of you who know my business and it's structure understand that I founded Akin Investments to help clients navigate and truly understand the many nuances of the financial world.


This new regulation from the Securities Exchange Commission became effective June 30, 2020

On June 5, 2019, the Securities and Exchange Commission adopted a package of rulemakings and interpretations designed to enhance the quality and transparency of retail investors’ relationships with investment advisers and broker-dealers, bringing the legal requirements and mandated disclosures in line with reasonable investor expectations, while preserving access (in terms of choice and cost) to a variety of investment services and products. Specifically, these actions include new Regulation Best Interest, the new Form CRS Relationship Summary, and two separate interpretations under the Investment Advisers Act of 1940.


Individually and collectively, these actions are designed to enhance and clarify the standards of conduct applicable to broker-dealers and investment advisers, help retail investors better understand and compare the services offered and make an informed choice of the relationship best suited to their needs and circumstances, and foster greater consistency in the level of protections provided by each regime, particularly at the point in time that a recommendation is made.

Investors Remain Front of Mind at the SEC: Approach to Allocation of Resources, Oversight and Rulemaking; Implementation of Regulation Best Interest and Form CRS


Chairman Jay Clayton

Regulation Best Interest and Form CRS

Financial professionals are required to never put their interests ahead of the interests of their clients and customers; and the confidence that this bedrock principle gives to those more than 57 million households I mentioned is particularly important in these times of economic uncertainty.  Understanding this, on June 5, 2019, the Commission adopted Regulation Best Interest (“Reg BI”). Reg BI establishes a new standard of conduct for broker-dealers and their associated persons when making a recommendation of any securities transaction or investment strategy involving securities (including account recommendations) to a retail customer. https://www.sec.gov/news/public-statement/statement-clayton-investors-rbi-form-crs


Below is an excerpt from an INDEX JOURNAL article


Expert: Be cautious before choosing financial adviser | By ADAM BENSON abenson@indexjournal.com

The tool can be particularly important for somebody thinking of retaining an independent financial consultant who doesn’t have the backing of a major bank or lending house.

“One of the first things a potential investor should consider is FINRA’s BrokerCheck. They do an excellent job in vetting everyone’s personal and professional background. It’s a free service and it’s a quick and easy way to begin verifying both a firm and/or an individual that they may be considering a relationship with,” said Stephen Akin, of Greenwood-based Akin Investment Advisory.

Akin is a member in good standing with no complaints against him, according to FINRA.

With assets of $1 million under his watch, Akin said he created a layer of accountability between himself and his clients’ money.


“I have my business set up to where I don’t take custody of any cash and/or securities, and I don’t have access to withdraw any kind of fees from a customer’s account,” Akin said. “I receive my fees separately. I provide completely independent, unbiased information, planning, research and portfolio management for my clients.”

Why?


“The bottom line is, if the representative or the firm has any access to any part of the funds, securities or accounts in any way, there will be the potential for an inherent conflict,” Akin said.


It’s one of the most significant decisions a person can make: Who can I trust to monitor my investments? https://www.indexjournal.com/news/expert-take-caution-before-choosing-financial-adviser/article_45051e58-ddb6-58ab-b310-b4742852aafa.html


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Check out our updated June 30, 2020 ADV Part 2 A & B that contains form CRS or Privacy Policy and Code of Ethics


Additional blog posts on this topic:



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