Investors Win with New SEC 'Best Interest' Rules on Brokers

The Securities and Exchange Commission (SEC) recently approved a consumer-friendly package of Best Interest Rules that require brokerage firms to disclose potential conflicts of interest when giving financial guidance to consumers.

The new requirements provide stronger protections and transparency for clients of investment advisers and broker-dealers. Officially known as the SEC Regulation, the new rules raise the bar on the broker-dealer standard of conduct beyond existing "suitability" obligations. The suitability standard meant that investments or products that brokers recommended for clients needed to be merely "suitable" for their goals, but not necessarily the best choice or the one with the lowest fees.