Suitability asks whether a recommendation fits you: your age, goals, other investments, time horizon and tolerance for risk. A fiduciary has to act in your best interest, not put their own interest ahead of yours, and keep doing so for the whole relationship. For most individual investors, plain suitability is no longer the rule. A third standard, best interest, replaced it for brokers’ recommendations to individuals on June 30, 2020, and all 50 states had adopted a best-interest rule for annuity sales by April 2025. Suitability still applies in a few places, and best interest still isn’t fiduciary, so it’s worth knowing which rule you’re under.
Three standards side by side
| Suitability | Best interest | Fiduciary | |
|---|---|---|---|
| The question | Does this fit the customer’s profile? | Is this in the customer’s best interest, without putting the seller’s interest first? | Is this in the client’s best interest, throughout the relationship? |
| Where it comes from | FINRA Rule 2111 | SEC Regulation Best Interest; state annuity rules | Investment Advisers Act |
| Who it covers today | Broker recommendations Reg BI doesn’t reach | Brokers advising individuals; insurance agents selling annuities | Investment advisers, including robo-advisors |
| When it applies | At the recommendation | At the recommendation | The whole relationship |
| Watching your account | No ongoing duty | Not required unless agreed | Part of the duty where agreed |
What suitability asks
FINRA’s suitability rule requires a broker to have “a reasonable basis to believe” a recommendation is suitable, based on your investment profile: “age, other investments, financial situation and needs, tax status, investment objectives, investment experience, investment time horizon, liquidity needs, risk tolerance.” It has three parts:
- Reasonable basis: the investment is suitable for at least some investors.
- Customer-specific: it’s suitable for you in particular.
- Quantitative: a series of trades isn’t excessive taken together, which guards against churning an account for commissions.
That’s a real test, but a narrow one. It asks whether a recommendation fits, not whether it’s the best available for you.
How best interest raised the bar
The SEC said in 2019 that Regulation Best Interest “will enhance the broker-dealer standard of conduct beyond existing suitability obligations.” It kept the fit test and added four obligations: disclosure, care, conflicts of interest and compliance. Two changes matter most to you:
- Disclosure alone isn’t enough. A broker can’t satisfy the rule just by telling you about a conflict.
- Cost counts. The SEC calls cost “one important factor among many.” A broker doesn’t have to recommend the cheapest option, but can’t ignore price.
Reg BI also covers recommendations about which kind of account to use, including “recommendations to roll over or transfer assets,” such as moving a 401(k) into an IRA.
Annuities followed. The NAIC revised its annuity model in February 2020 so that agents act with “reasonable diligence, care and skill” and don’t put their financial interests ahead of yours. New Jersey’s adoption in April 2025 made it all 50 states with a best-interest standard for annuities, though not every state uses the NAIC model as written. New York’s rule goes further and covers life insurance as well as annuities.
Where plain suitability still applies
FINRA’s rule now says it “shall not apply to recommendations subject to” Regulation Best Interest. What’s left:
- Business accounts. Reg BI covers individuals using a recommendation primarily for personal, family or household purposes. Recommendations to a company, or to a person investing for business purposes, such as your company’s cash, can fall back to suitability.
- Institutional accounts. Firms and some large investors who say they’re exercising their own judgment get a lighter version of the suitability test.
- Some insurance. The NAIC’s best-interest model covers annuities. New York’s rule also covers life insurance; elsewhere, ask which standard applies to a life policy.
In Canada, advisors make a “suitability determination” under rules that require them to put the client’s interest first. Our guide to whether your advisor is a fiduciary covers the Canadian rules.
Best interest still isn’t fiduciary
Best interest applies at the moment of the recommendation. The SEC says Reg BI “does not impose a duty to monitor” your account. An investment adviser’s fiduciary duty, by contrast, “applies to the entire relationship.” Commissions are allowed under both best-interest rules, and a dual-registered advisor can switch between standards from one account to the next. Our fiduciary guide explains dual registrants, and RIA vs broker-dealer compares the two kinds of firm.
Retirement accounts. The Labor Department’s 2024 rule, which would have widened fiduciary duty for retirement advice including one-time rollover recommendations, was vacated by a federal appeals court in 2026 and removed. The Labor Department’s 1975 definition of fiduciary advice still applies. A broker recommending a rollover is held to Reg BI.
What each standard means for what you pay
A standard doesn’t set a price, but it shapes how the person is paid.
- Suitability and best interest allow commissions and product payments. You may never see a bill, and the cost sits inside the product. Cost is a factor under best interest, not a limit.
- Fiduciary advisers can still earn commissions if they disclose the conflict. A fee-only fiduciary can’t: they’re paid only by you. Among fee-only firms that publish prices, the median is $4,500 a year for ongoing planning, $2,000 for a one-time plan, $300 an hour or 1% of assets.
For a single recommendation, such as whether to roll over a 401(k) or buy an annuity, a one-time review by a fee-only planner at a median $300 an hour can be cheap insurance. See what an hourly planner costs.
How to check which standard applies
- Read the Form CRS. Under “What are your legal obligations to me,” an adviser’s says “when acting as my investment adviser”; a broker’s says “when providing recommendations.” A firm offering both covers both.
- Search the person. adviserinfo.sec.gov shows investment adviser registrations; BrokerCheck shows broker registrations. Both means two hats.
- For insurance, ask for the licence. Annuities and life insurance are sold under a state insurance licence, which your state insurance department can confirm.
- Ask in writing. “Which standard applies to this recommendation: fiduciary, best interest or suitability? Will you act as a fiduciary on every account, including insurance?”
A fee-only adviser answers one word, fiduciary, every time. Our guide to telling whether an advisor is fee-only shows how to confirm it, and fee-only vs fee-based vs commission explains the pay behind each standard.