NASAA Uniform Investment Adviser Law Examination - Series 65 - v12 - Trending Topics

Sep 25, 2026

Overview of NASAA Series 65 “Trending Topics” focused on SEC Regulation Best Interest (Reg BI) and related customer disclosures. Covers how broker-dealers and investment advisers must ensure recommendations and advice are in the retail customer’s best interest, not the firm’s interests. Explains who qualifies as a retail customer, the Client Relationship Summary (Form CRS) timing and filing requirements, and four core broker-dealer obligations: disclosure, care, conflicts of interest, and compliance. Also addresses suitability differences, title restrictions, and limits on sales contests and non-cash compensation.

LanguageEnglish

CategoryExam

FormatPDF

Pages16

Reading Time40 min

AccessFree to download

TRENDING TOPICS

REGULATION BEST INTEREST (REG BI)

Who's a Retail Customer?

Client Relationship Summary (Form CRS)

General Obligations

Suitability

Titles

Sales Contests

NASAA Uniform Investment Adviser Law Examination SerieS 65 Trending Topics | Crunch Time Facts | Key Formulas v12 TRENDING TOPICS REGULATION BEST INTEREST (REG BI) Recently, the SEC adopted a package of rulemakings and interpretations that are designed to enhance the quality and transparency of retail customers’ relationships with broker-dealers and investment advisers. These rules will bring 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 Customer Relationship Summary (Form CRS), and separate interpretations under the Investment Advisers Act of 1940. Regardless of whether a retail customer chooses a broker-dealer or an investment adviser (or both), the retail customer is entitled to a recommendation (from a broker-dealer) or advice (from an investment adviser) that’s in the customer’s best interest and that doesn’t place the interests ofthe firm or the financial professional ahead of the customer’s interests. In other words, any strategy or product that firms or individuals recommend to retail customers must be in the customers’ best interest (not just suitable) . Who’s a Retail Customer? Currently, Reg BI only applies to retail customers. According to the regulation, a retail customer is defined as a natural person, or this person’s non-professional legal representative, who: 􀂃 Receives a recommendation of any securities transaction or investment strategy involving securities from a brokerdealer; and 􀂃 Uses the recommendation primarily for personal, family, or household purposes Professional legal representatives (e.g., financial industry professionals) and other fiduciaries are not considered retail customers. Client Relationship Summary (Form CRS) Along with the passage of Reg BI, the SEC adopted a new relationship summary disclosure document that broker-dealers must provide for retail customer—the Client Relationship Summary (Form CRS). Form CRS must be no longer than two pages. The purpose of Form CRS is to provide retail investors with information about the nature of their relationship with their financial professional in a simple, easy-to-understand format. 􀂃 New retail investors must receive a copy of Form CRS by no later than the time they open a brokerage account, place an order, or receive a new recommendation for an account type, securities transaction, or investment strategy. 􀂃 All existing retail customers will receive Form CRS early in the summer of 2020. Broker-dealers must file Form CRS with the Central Registration Depository (CRD), while registered investment advisers must file Form CRS with the Investment Adviser Registration Depository (IARD) as Part 3 of Form ADV. General Obligations Brokerage firms must fulfill the following four specific obligations in order to satisfy their overall duty under Regulation BI: 1. Disclosure – Provide certain required disclosures regarding any recommendation made to a retail customer and the relationship between the firm and the customer before or at the time of the recommendation. 2. Care – Exercise reasonable diligence, care, and skill in making recommendations. 3. Conflicts of interest – Establish, maintain, and enforce written policies and procedures that are reasonably designed to address conflicts of interest. 4. Compliance – Establish, maintain, and enforce written policies and procedures that are reasonably designed to achieve compliance with Reg BI. Broker-dealers are subject to Reg BI, whereas investment advisers are subject to the provisions of the Investment Advisors Act of 1940. Reg BI applies to any recommendations that are made to retail customers and extend beyond securities or portfolio recommendations, including whether an investor should roll over a 401(k) into an IRA or recommendations as t

FAQs

What is the central requirement of Regulation Best Interest (Reg BI) for retail customer recommendations?

Reg BI requires that recommendations to a retail customer be in the customer’s best interest and not place the firm’s or financial professional’s interests ahead of the customer’s interests.

How does Form CRS relate to Reg BI, and when must it be provided?

Form CRS is a relationship-summary disclosure document that must be provided to new retail investors by the time they open an account or receive a new recommendation, and to existing retail customers early in summer 2020.

What four general obligations must brokerage firms meet under Regulation BI?

Brokerage firms must satisfy disclosure, care, conflicts of interest, and compliance obligations through written policies and procedures designed to achieve those duties.

Sep 25, 2026

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