The aging of the Greatest Generation and the Baby Boomers is highlighting the difficulties resulting from the cognitive decline of the investors of those generations. The inability of some of those senior investors to understand and process financial information is inconsistent with our self-reliant investing culture, which is largely based on disclosures in lengthy documents. Part of the burden is being placed on advisors due to the new best interest standards for broker-dealers and insurance brokers and agents. In addition, the SEC has heightened the expectations of the existing best interest standard for investment advisers. In addition to the burdens, there are also opportunities for advisors to help protect senior investors from financial abuse.
In Case You Missed It: fredreish.com Popular Insights
Each calendar quarter, I post approximately 12 articles on my blog. This quarterly digest provides links to the most popular posts during the past three months so that you can catch up on what you missed or re-read them.
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The CARES ACT: Helping Your 401(K) Participants During the Coronavirus Crisis
Waiver of Required Minimum Distributions
Updated through July 28, 2020
By Fred Reish, Bruce Ashton and Betsy Olson
This is the third in our series of articles on special CARES Act provisions designed to help your 401(k) participants. In our prior articles, we discussed the temporary loan enhancement rules and coronavirus-related distributions (CRDs). Here we discuss the temporary relief from taking required minimum distributions. NOTE: This article has been updated to reflect guidance issued after the original publication, in Internal Revenue Service (IRS) Notices 2020-50 and 2020-51.
Continue reading The CARES ACT: Helping Your 401(K) Participants During the Coronavirus Crisis
The CARES Act: Helping Your 401(K) Participants During the Coronavirus Crisis
Special Distributions to Qualified Participants
Updated through July 28, 2020
By Fred Reish, Bruce Ashton and Betsy Olson
Our first article discussed CARES Act provisions designed to help your 401(k) participants with temporary loan enhancements. Here we discuss a second provision of the Act that can help participants who are affected by the coronavirus (called “qualified individuals”*). This is a special coronavirus-related distribution (a CRD). Though we discuss this in the context of 401(k) plans, the CRD provision applies to all qualified plans, 403(b) plans and IRAs as well. NOTE: This article has been updated to reflect guidance issued after the original publication, in Internal Revenue Service (IRS) Notice 2020-50.
Continue reading The CARES Act: Helping Your 401(K) Participants During the Coronavirus Crisis
The CARES Act: Helping Your 401(K) Participants During the Coronavirus Crisis
The Enhanced Loan Provision for Qualified Participants
Updated through July 28, 2020
By Fred Reish, Bruce Ashton and Betsy Olson
With the spread of the coronavirus and the resulting closures and cutbacks, many 401(k) participants are working reduced hours, but are not considered to be terminated for purposes of ERISA. Furloughs and similar required leaves are common for businesses whose employees interact directly with retail customers, such as restaurants, stores, and gyms.
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The Coronavirus Crisis: What Plan Sponsors Should Do
By Fred Reish and Bruce Ashton
The Coronavirus pandemic is disrupting everyone’s personal and financial lives. While our health, and that of our families and friends, is paramount, we realize that the sudden and large investment losses in the 401(k) plans that you sponsor – and act as fiduciaries for – present issues more challenging than those typically encountered by employers and plan committees. This article suggests steps that you can take as fiduciaries to address those challenges. The article also applies to advisors because it addresses questions they may get from plan sponsors.
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Best Interest Standard of Care for Advisors #28
Regulation Best Interest, RIA Interpretation and Consideration of “Account Types” (Part 4)
The SEC has issued its final Regulation Best Interest (Reg BI), Form CRS Rule, RIA Interpretation and Solely Incidental Interpretation. I am discussing the SEC’s guidance in a series of articles entitled “Best Interest Standard of Care for Advisors.”
In my last three posts (Best Interest for Advisors #25, #26 and #27), I have discussed the SEC guidance for broker-dealers and investment advisers about recommendations of “account types.” The articles explained that investment advisers are subject to the best interest standard for recommending account types (since July of last year) and broker-dealers will be subject to the new best interest rules for recommending account types beginning June 30 of this year. Those articles discussed the rule, the definition of account types, and the process required to evaluate account types. This article discusses examples given by the SEC about the application of the best interest standard when considering account types.
Continue reading Best Interest Standard of Care for Advisors #28
Best Interest Standard of Care for Advisors #27
Regulation Best Interest, RIA Interpretation and Consideration of “Account Types” (Part 3)
The SEC has issued its final Regulation Best Interest (Reg BI), Form CRS Rule, RIA Interpretation and Solely Incidental Interpretation. I am discussing the SEC’s guidance in a series of articles entitled “Best Interest Standard of Care for Advisors.”
Regulation Best Interest (Reg BI) and the Interpretation Regarding Standard of Conduct for Investment Advisers (RIA Interpretation) require that broker-dealers and investment advisers evaluate the “account types” their firms offer—in light of the investor’s investment profile—to make a best interest recommendation. In other words, both types of firms, and their advisors, must first consider the account type that is appropriate for the investor.
Continue reading Best Interest Standard of Care for Advisors #27
The DOL’s Fiduciary Rule: Will We Get a New Rule?
by Brad Campbell and Fred Reish
As you may know, the Department of Labor has included the proposal of a new fiduciary rule on its Regulatory Agenda. The Agenda indicated that it would be issued in December of last year. But, of course, it hasn’t.
That raises the question of, if we get a proposed regulation in the near future, will it ever become a final rule?
Of course, if the current Administration wins the Presidential election, the proposed regulation would ultimately be adopted in final form (perhaps with some minor changes). However, if the White House changes parties after this November’s election, there may not be enough time for a regulation to be proposed and finalized. Here’s why.
There are several ways that a new, incoming Administration can stop a regulation from the prior Administration.
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Best Interest Standard of Care for Advisors #26
Regulation Best Interest: Recommendations of Account Types (Part 2)
The SEC has issued its final Regulation Best Interest (Reg BI), Form CRS Rule, RIA Interpretation and Solely Incidental Interpretation. I am discussing the SEC’s guidance in a series of articles entitled “Best Interest Standard of Care for Advisors.”
In my last post (Best Interest for Advisors #25), I discussed the SEC guidance for broker-dealers and investment advisers on recommendations of account types. The article explained that investment advisers are subject to the best interest standard for recommending account types (since July of last year) and broker-dealers will be subject to the new best interest rules for recommending account types (beginning June 30 of this year).
The focus of the article, though, was to define what an account type was. As the article explained, “account type” is to be interpreted very broadly and includes many programs and accounts that may not obviously be considered types of accounts. As a result, the first compliance step for broker-dealers and investment advisers is to identify all of the account types they offer. Then those firms can develop the processes for their advisors to consider the types of accounts (and compare different types of accounts) offered by the firm . . . in light of the investor’s needs. (The rules apply to retail customers of broker-dealers and all clients of investment advisers.)
Continue reading Best Interest Standard of Care for Advisors #26