Regulation Best Interest Compliance

Written by: Marshall Heitzman, CFP®, ChFC, FLMI, CPCU, BFA™

Sep 8, 2020 Share This 



The Securities and Exchange Commission’s (SEC) Regulation Best Interest (Reg BI) standard went into effect June 29, 2020. According to the SEC, the new standard of conduct and disclosure requirements are intended to increase transparency for customers and maintain access and choice to a broad range of products and services.1

Under the new Reg BI standard, broker-dealers must demonstrate that they act in the customer’s best interest in making their recommendations.2 This means advisors have a duty to assess and offer available products in the market that they feel best meet the customer’s needs. A customer focus requires a thorough understanding of the various kinds of products available, the potential gains and risks of losses, and the ways they can help customers achieve their individual investment goals. If the best solutions include risk control products, it’s crucial for advisors to understand how annuities work.

When identifying the best solutions for their customers, CUNA Mutual Group makes available risk control products that may help financial professionals meet their clients’ needs, therefore fulfilling Reg BI obligations.

Reg BI Basics

On its face, the purpose of the new rule is to apply a “best interest” standard — comparable to the fiduciary standard for registered investment advisors (RIAs) — to brokers who use the term “advisor.”

Along with the “best interest” standard, broker-dealers must meet four specific obligations:

  • Care – Brokers must exercise reasonable diligence, care, and skill when making recommendations to retail customers
  • Disclosure – Brokers must disclose facts related to the relationships between themselves and products or investments they may recommend, both through Form CRS and in discussions with customers3
  • Conflict of Interest – Brokers may not put their business interests ahead of retail customers’ by limiting or promoting specific offerings
  • Compliance – Brokers must have and enforce written policies and procedures designed to achieve compliance

Reg BI’s new requirements point to a need for advisors to inform themselves about the wide range of product options available to address their clients’ various needs  — because they now have a clear duty to exercise diligence in understanding all investment options, and, from there, suggest those options that are best suited to meet what each needs. Ultimately, transparency works to establish and maintain trust between advisor and client

How CUNA Mutual Group Can Support Reg BI Compliance

Advisors now have a clearly articulated obligation to know and understand any product they recommend. As it relates to addressing client’s needs for protection from market volatility and potential investment losses, CUNA Mutual Group offers risk control products that are easy to understand and easy to explain to customers, helping financial professionals meet their obligations. Our extensive selection of support communications, both for professionals and for customers, help clarify the benefits of our risk control products and show customers how annuities can offer guaranteed income and growth potential that may be a fit for their overall investment planning strategies.

Annuities offered by CUNA Mutual Group are often near or at the top of their benefit categories for payout, and their floor risk control features reduce unwanted, unknown risk of loss to investors. In fact, several have been ranked among Barron’s Top 100 Annuities for 2020. Customers in search of investment opportunities that help them limit losses may find their best interests met by an annuity, and advisors can clarify the risks and benefits, demonstrating their commitment to the Reg BI care obligation.

CUNA Mutual Group is here to support financial professionals who need more information to improve their fluency in annuities and annuity features. Our range of risk control products is designed to meet the needs of varying investor profiles, at different life stages and with different investment horizons. We provide useful, in-depth, informative resources to help financial professionals point diverse investors toward products that may meet their needs.

Our brokers benefit from the support of a dedicated team to answer questions and help find solutions. We also provide communication support materials for financial professionals that make it easy to explain — and easy for investors to understand — how annuities work and may help them meet their financial goals.

Getting appointed with CUNA Mutual Group is one way financial professionals can deepen their expertise and better understand annuities, to better serve customers. We’ve made the process simple and easy to understand, too — just call 877.345.4769 (GROW), option 1, or start here.

To help guide conversations with customers and help them get acquainted with different types of risk control products, we’ve developed this useful infographic. It’s a great way to start talking about annuities, and it’s just one of many ways CUNA Mutual Group is here to help financial professionals serve their customers.

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Marshall Heitzman
Written by: Marshall Heitzman, CFP®, ChFC, FLMI, CPCU, BFA™

Marshall is CUNA Mutual Group's Head of Advanced Planning and has more than 25 years experience in the insurance and financial services industry. He consults Financial Advisors on advanced retirement planning concepts for retirement and wealth management clients.


1 U.S. Securities and Exchange Commission, Regulation Best Interest, Form CRS and Related Interpretations

2 U.S. Securities and Exchange Commission, SEC Adopts Rules and Interpretations to EnhanceProtections and Preserve Choice for Retail Investors in Their Relationships With Financial Professionals, June 5, 2019.

3 Marketwatch, A Hippocratic Oath for Financial Advisers? The SEC’s New ‘Regulation Best Interest’ Gets Mixed Reviews, July 19, 2020.


Topics: Advanced Planning