Suitability

# Regulation Best Interest (Reg BI) and Suitability > Exam weight context (sourced from FINRA 2025 Series 7 outline): Suitability and Reg BI fall primarily within Function 2 (9% / 11 questions) and Function 3 (73% / 91 questions) of the Series 7's 125 scored questions. Function 3 alone represents nearly three-quarters of the exam — know this material cold. > > Key rule cites from the 2025 outline: FINRA Rule 2111 (Suitability); SEC Exchange Act Rule 15l-1 (Regulation Best Interest); MSRB Rule G-19 (Suitability of Recommendations and Transactions); FINRA Rule 2214 (Requirements for the Use of Investment Analysis Tools). --- ## The Shift from Suitability to Best Interest For decades, broker-dealers operated under a suitability standard codified in FINRA Rule 2111: recommendations had to be "suitable" for the customer based on their investment profile. This was a relatively low bar — a product could be suitable even if there were better, cheaper alternatives. In June 2019, the SEC adopted Regulation Best Interest (Reg BI), codified as Exchange Act Rule 15l-1, effective June 30, 2020. Under Reg BI, a recommendation must be in the customer's best interest at the time of the recommendation, considering all alternatives — not merely "suitable." | Standard | Rule | Who It Applies To | Key Obligation | |---|---|---|---| | Suitability (still tested) | FINRA Rule 2111 | Broker-dealers | Recommendation must be "suitable" based on customer profile | | Best Interest (Reg BI) (current standard) | Exchange Act Rule 15l-1 | Broker-dealers making recommendations to retail customers | Must be in the customer's best interest at…