SEC Targets Advisers/BDs that Recommend Retirement Products
The SEC’s Office of Compliance Inspections and Examinations has announced an initiative to review the activities of both advisers and broker-dealers when recommending retirement savings products. Dubbed the “ReTire Initiative” (Retirement-Targeted Industry Reviews and Examinations), the National Examination Program will take a “multi-year” approach and will review: (i) suitability including account type, investment due diligence, recommendations, and ongoing account management, (ii) conflicts of interest including compensation structure, (iii) compliance controls and supervision, and (iv) marketing and disclosure including fees and credentials. The staff will select examination targets using data analytics, information from prior exams, and “examiner-driven due diligence.” OCIE intends to “encourage registrants to reflect upon their own practices, policies, and procedures in these areas and to promote improvements in their supervisory, oversight, and compliance programs, as deemed appropriate.”
OUR TAKE: We recommend that firms have specific policies and procedures addressing the recommendation of retirement savings products to retail investors. These P/P should include heightened supervision, enhanced disclosure, more training, and expanded review of conflicts.