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1Q20: The SEC Says That Rollover Recommendations Must Be in the Best Interest of the Participants: What That Means for Advisors

First Quarter 2020 
By Fred Reish

What the SEC's new standards mean for advisors and rollover recommendations.


Fred Reish is an ERISA attorney whose practice focuses on fiduciary responsibility, retirement income, and plan operational issues. He has been recognized as one of the “legends” of the retirement industry by both PLANADVISER magazine and PLANSPONSOR magazine.


In June of 2019 the SEC issued its Interpretation Regarding Standard of Conduct for Investment Advisers (”RIA Interpretation”) and Regulation Best Interest for broker-dealers (“Reg BI”). The RIA Interpretation already applies to investment advisers and Reg BI will apply to broker-dealers and their advisors on June 30, 2020.

Both pieces of guidance say rollover recommendations to participants are subject to the best interest standard of care, as well as their conflict and disclosure requirements. This article looks at the standard of care for recommending rollovers from 401(k) plans to IRAs. (Note, though, that the new rules apply to all “workplace retirement plans”, which includes ERISA-governed plans and government plans, participant savings plans, and pension plans. As a result, these rules apply more broadly to rollover recommendations than those in the vacated Department of Labor’s fiduciary rule.)



The views expressed here are those of Fred Reish. They should not be construed as investment advice or as the views of Hartford Funds or the employees of Hartford Funds. They are based on available information and are subject to change without notice. The information above is intended as general information and is not intended to provide, nor may it be construed as providing, tax, accounting or legal advice. As with all matters of a tax or legal nature, please consult with your tax or legal counsel for advice. This material and/or its contents are current at the time of writing and may not be reproduced or distributed in whole or in part, for any purpose, without the express written consent of Fred Reish.

Hartford Funds Distributors, LLC, Member FINRA.

MFDC-1Q20_0120   215209