Jason Roberts, founder and CEO of the retirement
services consulting firm Pension
Resource Institute, explains rollover recommendations have long been on
the Department of Labor’s (DOL) radar. For that reason he predicts advisers already serving as
fiduciaries for retirement plan clients will likely not face a fundamental
shift in the sorts of rollover recommendations that constitute prohibited
transactions under the Employee Retirement Income Security Act (ERISA) when new
fiduciary rules finally come through—though the fiduciary net may be widened to
include more types of advice relationships.
The DOL could deliver new rules as soon as
August, but observers say it is likelier the fiduciary redefinition will be
delayed once again and will not be released until after the midterm elections, in late 2014 or early 2015. Other regulators, including the Financial Industry Regulatory
Authority (FINRA) and the Securities and Exchange Commission (SEC) are kicking
around rule changes of their own related to rollovers, cross-selling and fiduciary
status (see “Some
Advisers May Want to Pause on Rollovers”).
The regulators say they are examining whether
emerging technologies and business models cause previously overlooked conflicts of interest. Concern about individual
retirement account (IRA) rollovers in particular is growing, as an estimated $2.1 trillion
is expected to flow from defined contribution (DC) retirement plans into IRAs
in just the next five years (see “An
Inside Perspective on Rollover Rulemaking”).
get a sense of where they stand on the matter, Roberts says advisers should
turn to the DOL’s 2005
advisory opinion that sets forth the department’s
position on marketing additional services and products to plan
participants and beneficiaries. The opinion points to three factors that advisers
should be aware of while considering whether they face an inherent conflict of
interest when recommending clients move money away from an employer-sponsored
plan and into an IRA.