Since the bulk of advisor clients and assets come from retiree rollovers, how do practitioners protect themselves?

Thorough documentation is the key to good compliance, Schweiss said. Examiners want to see that the justification for rollovers and additional fees not only makes sense for the investor but that it is clearly documented.

Moving clients to fee accounts will not be justifiable for every investor, Schweiss warned.

Any recommendation that can’t be justified with the customer’s best interests in mind could be problematic and lead to an exam, both executives said.

Have A Fiduciary Process In Place

To reduce the risk of regulatory liability, Bell said advisors should “create a structure in your office, especially around compensation that incentivizes. How do you mitigate and document that in a way that shows you have a thoughtful process? I’d suggest you put it in writing. Have [the clients] sign it. Have that process and intake form for every single client.

“The SEC is interested in a broad array of potential conflict of interests, especially variable compensation offered by different products on the shelf,” Bell added. “To help advisors with that, [Cambridge] put together a fiduciary process to help them justify why they’re recommending one product over another.”

Cambridge’s fiduciary form is designed to help advisors and investors compare products. It looks at what products and services the clients and investors have today—and what fees and compensation they pay—and then compares those with the items the advisor is recommending. The tool helps advisors explain why they’re making a recommendation and clearly outline all the different but important variables. Both advisors and clients are given copies of the Cambridge best interest analysis. “The client signs it. The advisor signs it, and then we keep it in the file,” Bell said.

“You have to make sure you can clearly identify why you’re making the recommendation to make any movement, whether it’s from a plan to an IRA, from an IRA to an IRA, from a commission product to an advisory product,” Bell said. “I would clearly outline all those different variables so that when the SEC does ask, and they will, you have that information readily available.”

The SEC is looking at all recommendations and rollovers because of the growth in the number of retirees, Bell said.