The Securities and Exchange Commission is looking more closely at your IRA rollovers, experts warn. Examiners will not only be sifting through rollovers from retirement plans but from other IRAs, annuities and commissionable products.
Regulators want to ensure that your product offerings, fees and commissions are justified, said Colleen Bell, chief fiduciary service officer at Cambridge Investment Research.
Bell and other leading executives spoke at Financial Advisor’s 9th Annual Inside Retirement Conference in Las Vegas last week.
If you fail to justify your recommendations and fees for rollovers, you may trigger an SEC examination. “This is the most aggressive we’ve seen the SEC in years with respect to enforcement on the fiduciary side,” Bell said.
What exactly is the SEC looking at?
“They’re looking at reasonableness of fees. If they’re above 1 percent, you can push back and say it is reasonable, but you will have to justify that,” said Bell, who added that it is unclear whether the SEC will differentiate between financial planning and asset management fees when looking at the all-in bill to investors.
The danger for RIAs as the SEC ramps up its oversight is that many have not thought about whether their fees are reasonable, Bell said.
Fees are a hot topic with both the SEC and the Financial Industry Regulatory Authority, said Skip Schweiss, president of TD Ameritrade Trust Company.
The debate comes amid the recent death of the Department of Labor’s fiduciary rule, which would have required advisors to reveal their conflicts of interest in commission products. According to Schweiss, however, even though the rule is dead, “some of its principles are living on in exams and in other regulatory thinking.”
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