In a recent article, Financial Advisor Magazine recapped Faegre Drinker’s “DOL PTE 2020-02 Disclosures and Policies — Common Mistakes: An RIA Guide to Readiness Part 2” webinar that benefits and executive compensation partners Fred Reish, Jeffrey Blumberg, Joshua Waldbeser and counsel Joan Neri presented on Jan. 6, 2022.
The article highlighted how firms that want to opt out of the Department of Labor’s (DOL) retirement rollover rule and offer education to investors instead of specific rollover recommendations are still grappling with compliance issues.
Neri explained that the greatly expanded definition of “fiduciary advice” in the DOL rule applies to all registered investment advisers, broker-dealers and insurance representatives who decide they want to charge fees or commissions for rollover investment advice.
The publication also noted the attorneys warning that anything Securities and Exchange Commission (SEC) examiners find during exams would likely be turned over to the DOL for investigation and possible enforcement starting Feb. 1.
“Clearly, if you’re SEC-registered and they come in, there is a high likelihood they will refer rollover violations to the DOL. That’s less likely with state examiners, who don’t have the same relationship,” said Blumberg.
Waldbeser shared that one of the biggest red flags firm attorneys are seeing at firms opting to take the education-only route is the failure to recognize when they’re making “implied recommendations” regarding investment strategies.
Reish added “the more individualized the communication is, and the more data analysis involved, the more likely investor communications are a recommendation.”