Some firms are even inputting all their care obligation data manually, he said.
For instance, some firms are still using PDF files to manage advisors’ self-attestation forms and some even plan to manually key in this information, rollover by rollover.
“With the DOL, the firm has to deliver the rationale behind a rollover recommendation directly to investors. In addition, they also have do an annual retrospective compliance review that is signed off by an executive team member.” Nasseri said.
On an annual basis “having to sift through thousands of manual rollover recommendations to do an annual review may handcuff firms down the road,” he added. Firms should also be able to track which rollover recommendations were deemed risky and detect if there are common denominators they should be addressing, he said.
“If you’re comparing an asset allocation fund, you have to be able to say why you picked one over the 20 other asset allocation funds that are available. You can’t cherry pick only those alternatives that will make your recommendation look better,” Nasseri said.
While securities firms are accustomed to working with the SEC, many have never worked with the DOL, which has the power to take away a firm’s eligibility to do rollovers for up to 10 years if systemic compliance failures are found.
Since the DOL’s prohibited transaction exemption (PTE) layers additional requirements on Reg BI, if you’re not prepared for Reg BI, it will be difficult to meet the DOL’s requirements, Nasseri warned.