Chances are, you missed the message that the Securities and Exchange Commission (SEC) recently sent to all investors.

   It went something like this: Nobody is protecting you, except for you.

   Oh, regulators weren’t that open and plain-spoken about it, but in finalizing their new “best interest” regulation — known in financial-services circles as “Reg BI” — they sent a clear message, again, that investors are mostly on their own when it comes to looking out for rogues, scoundrels and bad guys.

   Reg BI went into effect this month, and the only way most brokerage customers will even notice is if they get and read a new “client relationship summary” (Form CRS), disclosing how the relationship with the adviser or broker is supposed to work.

   Obviously, that is something that customers already should be aware of. It shouldn’t require a new regulation for advisers to spell these things out.

   But then, it shouldn’t take a regulation to ensure that brokers work in the “best interest” of their customers.


   Ironically, Reg BI doesn’t actually guarantee that you’ll get the best from an adviser; it is more a way of establishing a new minimum standard for advisory relationships without any promise that the broker/planner will do more, or even actually do their best.

   For nearly two decades now, the financial services industry has had vicious infighting over the establishment of a “fiduciary standard,” where all types of adviser would be required to put the customer’s interests first.

   Meanwhile, anyone selling “advice” — think financial planner/adviser — has been working as a fiduciary, with a legal requirement to put a client’s interest ahead of their own, but the sale of investment products — most notably by brokers — has been governed by “suitability” rules, meaning the investments sold need only be “suitable” for the customer.

   That can lead to the sale of expensive and/or mediocre investments because it’s possible to recommend something that is appropriate without it actually being the best choice for the buyer.

   Legislators and regulators have talked about tougher, uniform rules — and many brokers and wealth managers adopted a fiduciary standard as a result — but those proposals got bogged down largely due to aggressive lobbying from the brokerage community.

   Reg BI is what the politicos came up with instead, and the U.S. Department of Labor — which marshals advisory sales involving retirement plans — and the Financial Industry Regulatory Authority (FINRA) are tailoring their fiduciary rules to fall in line with it.



   The problem is simple. The language — “Regulation Best Interest” — suggests that brokers and investment advisers must work to ensure that your financial interest is served first.

   Yet because it’s not a fiduciary standard, there’s no legal standing to stop a greedy adviser from selling products you don’t want. And because the adviser isn’t a fiduciary, forget about suing a broker who wrongs you. Also, it leaves open some loopholes that a rogue adviser can squeeze through.

   It took me a while to read the actual regulation because it’s nebulous, fuzzy and obtuse; don’t bother reading it yourself — unless you are having a hard time sleeping — but trust me and the consumer advocates like the Consumer Federation of America saying that this regulation is bad for individual investors.

   Mind you, rules against bad adviser practices don’t end trouble any more than rules requiring face masks during the coronavirus pandemic ensure total compliance.

   The SEC, Department of Labor and FINRA don’t have the power to stamp out bad actors and rogues, no matter what rules and regulations they put into place.

   The problem is that Reg BI might get consumers to drop their guard, giving it the potential to be more dangerous than helpful.


   If the rules don’t make it clear who to trust and why — and they don’t — then you need to be diligent to make sure you are getting the kind of advisory relationship you want.

   Here’s what you must do to survive and thrive with an adviser, whether it’s a broker, planner, wealth counselor or any other type of intermediary:

   1) Make them tell you if they act as a fiduciary. Get it in writing if they’re working in your best interest.

   “Best interest” frequently translates to “lowest cost.” That translation isn’t perfect — it can be like choosing between name-brand drugs and generics where some people pay more for the recognized brand — but always ask about the prices you’re paying and if there are lower-cost options.

   If those options exist but you aren’t seeing them, ask why.

   2) Read the paperwork before you get lost — and lose money — in a flurry of paperwork.


   An adviser looking to sell a pricier product — even if they truly believe it’s in your best interest — will cover their tail, and the devil will be in the disclosures.

   If there’s trouble, a rogue adviser will say that everything was properly disclosed, meaning you knew what you were getting into.

   Read the fine print; make sure you haven’t signed anything allowing the adviser to blur the line on what’s in your best interest.

   3) Rip-offs are always a possibility.

   If an adviser is facing personal money problems and goes crooked on you, the law, the rules and the disclosures won’t protect you; any satisfaction you get will come after the crime is discovered.

   If something smells fishy, ask questions or seek out second opinions.

   4) Regulations won’t save you from complacency.

   You can’t relax just because the bulk of brokers and planners are clean and scrupulous. Do background checks, looking for troubles an adviser has had with past clients. Ask what happened and how it was resolved and run from anyone whose record makes you uncomfortable. Check with both your state securities administrator and with FINRA’s site at

   With legislators and regulators failing to protect you, be your own best defender; the most effective protection against bad brokers and advisers is your own skepticism. Advisers must earn your trust; don’t assume you can trust them just because rules say they work in your best interest.