According to FINRA, Robert W. Baird & Co. Incorporated, as successor-in-interest to Hefren-Tillotson, Inc., has been censured, fined $100,000, and ordered to pay $557,830.64 plus interest in restitution to customers for violating Regulation Best Interest's Compliance Obligation.

The investigation found that Hefren-Tillotson's registered representatives recommended that customers open Portfolio Review Program accounts enrolling them in an advisory service, even though customers were already receiving those services through existing or simultaneously opened accounts. These customers did not receive any additional services by opening these accounts and paid $557,830.64 in unnecessary account fees.

The firm's written supervisory procedures were not reasonably designed to achieve compliance with Reg BI's requirement that account-type recommendations be in the customer's best interest. The procedures provided no guidance regarding factors to consider when recommending Portfolio Review Program accounts and did not require representatives to consider whether customers would benefit from a new account when already receiving those services.

Following its acquisition of Hefren-Tillotson's brokerage business, Baird voluntarily discontinued charging Portfolio Review fees and recommending these accounts.

This case is particularly instructive for investors because it demonstrates how Regulation Best Interest protects them from paying for services they don't need. Reg BI requires broker-dealers to act in their customers' best interest when making recommendations, including account-type recommendations. When firms recommend accounts that provide no additional benefit while charging additional fees, they violate this fundamental obligation.

Investors should carefully review any recommendations for new account types and ask specifically what additional services or benefits they will receive that they aren't already getting.