Arrow Icon
blog header pale blue image blog header abstract shape

Heart of Advice

Insights and best practices for successful financial planning engagement

left arrow Back to All Articles

Advisors Servicing Retirement Assets Are Targeted by the SEC

Guest Contributor February 16, 2016

Updated on: February 2, 2021

In my last post, I referenced the Department of Labor Land Grab, but the DOL is not the only agency with advisors in their cross-hairs. The SEC has also promised to codify a new, uniform fiduciary standard in 2016 based on the authority given them under Section 913 of the Dodd Frank Act, which was signed into law on July 2010 by President Obama.

However, before that new SEC fiduciary standard is published, advisors with a 401(k) and IRA Rollover practice and those advisors operating as investment managers of QDIAs have become a target for on-site examinations by the SEC’s Office of Compliance Inspections and Exams as part of their ReTIRE (Retirement Targeted Reviews and Examinations Initiatives) program since November 2015.

The SEC is focusing their examination efforts on advisors with titles, designations, or certifications that are retirement specific. In addition to being an unwelcome business interruption, the results of the examination can be costly especially if the advisor is found to be out of compliance.

Key examination areas of focus include detailed documentation of:

  1. Total assets by retirement plan or IRA client.
  2. Marketing materials and sales scripts related to 401(k) distribution options.
  3. Disclosure of conflicts of interest.
  4. Disclosure of all direct and indirect (revenue sharing) fees.
  5. Disclosure of fees charged on QDIAs.
  6. Proof that disclosures were delivered.

Although some industry pundits are predicting a delay in the SEC fiduciary rulemaking, it will not curtail their examination activities which the SEC promised is a multi-year initiative. Moreover, let’s not forget that both the DOL and SEC joined forces in 2013 to investigate advisors by sharing their findings with each other. So, if the SEC finds something of interest, your next visitor is likely to be the DOL or vice versa.

What this means for advisors that do not have a developed retirement operations department is that their internal business practices must change. The most successful advisors are hunters that leave the details to someone else but with these new business threats, advisors will need to focus their time and attention on boring details or hire someone that will.

As a result, advisor costs will go up as fee compression squeezes revenues. Margins can be protected however, with the right structure, leadership, and technology.

You may also be interested in...

Modern workplace diversity with smiling colleagues

Fostering Diversity and Inclusion in the Financial Planning Profession

The financial planning profession stands at a crossroads of change. As we push towards creating a more inclusive and diverse… Read More

A financial professional working on their laptop.

What’s Inside the New Guide to CFP Board’s Technology Standard?

Technology is a critical tool in every financial planning firm, and it is important for financial professionals to use it… Read More

Capitol Building - Tax Legislation in Senate

Navigating 2024 Tax Legislation: A Financial Advisor’s Guide to Key Updates and Proposed Changes

In the dynamic realm of tax legislation, financial professionals must remain vigilant to navigate their clients’ tax obligations. This blog… Read More

eBook: The New Advisor Value Proposition

Download our latest eBook and learn how top advisors are combining Fintech and FinPsych for superior client outcomes.

Download Now

Sign up to have the most popular Heart of Advice posts delivered to your inbox monthly.

Heart of Advice by eMoney Advisors

Welcome to
Heart of Advice

a new source of expert insights for
financial professionals.

Get Started

Tips specific to the eMoney platform can be found in
the eMoney
application, under Help, eMoney Advisor Blog.