Later this week, advisors handling retirement portfolios will face new requirements to ensure that the advice they are providing is in their clients’ best interest.
As of July 1, advisors will have to document the rationale behind the move to roll over a client's retirement account to an IRA, including a comparative analysis with a client's employer plan.
The new rules date back to a policy the Department of Labor enacted in December 2020 called Prohibited Transaction Exemption 2020-02. Much of that package was implemented in February, but the lingering piece involving rollover accounts takes effect Friday, July 1.
At that point, advisors will have to document the rationale behind the move to roll over a client’s employer account to an IRA.
“The DOL requires specific considerations when making rollover recommendations, and it also requires a written disclosure to the client outlining why the recommendation was in the best interest of the client,” Ed Wegener, managing director of governance, risk, and compliance at Oyster Consulting, wrote in a blog post explaining the new requirements.