Tag Archives: retirement

Things I Worry About (10): FINRA Enforcement and Senior Investors (2)


best interest, IRA, reg BI, rollovers, SEC
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Key Takeaways

  • FINRA’s 2025 Annual Regulatory Oversight Report 2025-annual-regulatory-oversight-report.pdf included a focus on issues related to retirees and senior investors.
  • The Report provides guidance to broker-dealers about the priorities of FINRA in its regulation, supervision and enforcement programs for broker-dealers. In other words, it is one of FINRA’s ways of telling the regulated community that it should be paying particular attention to certain issues.
  • Consistent with my focus on retirement plans and retirees, I searched the Report for references to retirement, rollovers, elderly and senior investors. As expected, FINRA did have a lot of concern about those subjects. Here is what I found.
  • While the FINRA Report only directly applies to broker-dealers, the issues and concerns apply to investment advisers as well, but the regulator in that case is the SEC.

This article is a sequel to my last one on FINRA’s 2024 Annual Regulatory Report Things I Worry About (9).

Among other things, FINRA is focusing on services and recommendations by broker-dealers and their registered representatives to retirees, senior investors and investors with diminished capacity.  To state the obvious, the regulator is concerned about the aging of the Boomers in real time.

The Report discusses the application of Regulation Best Interest (Reg BI) to rollover recommendations. Here is what it says in the section on Failure to Comply with the Compliance Obligation:

Failing to have written policies and procedures reasonably designed or enforced with respect to account recommendations, for example, by:

  • not being reasonably designed to address recommended transfers of products between brokerage and advisory accounts or rollover recommendations;…

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Things I Worry About (9): FINRA Enforcement and Senior Investors (1)


best interest, IRA, reg BI, rollovers, SEC
, , , , , , ,

Key Takeaways

  • FINRA’s 2024 Annual Regulatory Oversight Report 2024 FINRA Annual Regulatory Oversight Report | FINRA.org included a focus on issues related to retirees and senior investors.
  • The Report provides guidance to broker-dealers about the priorities of FINRA in its regulation, supervision and enforcement programs for broker-dealers. In other words, it is one of FINRA’s ways of telling the regulated community that it should be paying particular attention to certain issues.
  • Consistent with my focus on retirement plans and retirees, I searched the Report for references to retirement, rollovers and senior investors. As expected, FINRA did have concerns about those subjects. Here is what I found.

Among other things, FINRA is focusing on services and recommendations by broker-dealers and their registered representatives to retirees, senior investors and investors with diminished capacity.

The Report has one part that specifically focuses Reg BI’s application to plan-to-IRA  and IRA-to-IRA transfer recommendations. Here is what it says. The bolding is mine.

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The New Fiduciary Rule (8): Special Issues—Robo Advice and Investment Education


DOL, fiduciary, IRA
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The U.S. Department of Labor has released its package of proposed changes to the regulation defining fiduciary advice and to the exemptions for conflicts and compensation for investment advice to plans, participants (including rollovers), and IRAs (including transfers).

Key Takeaways

  • The Department of Labor’s proposed regulation defining fiduciary investment and insurance advice to private sector retirement plans, participants in those plans, and IRA owners (collectively, “retirement investors”) includes three distinct definitions.
  • While the current version of PTE 2020-02 does not extend relief for prohibited transactions resulting from robo advice (that is, it requires a human intermediary), the proposal would extend the PTE’s protections to conflicts of interest (that is, prohibited transactions) so long as the conditions of the exemption are satisfied.
  • Some commenters have suggested that the new definitions of fiduciary status and of covered transactions are so broad that investment education would be considered fiduciary advice. To be polite, that is an exaggeration.

My last post, The New Fiduciary Rule (7), discuss the “non-discretionary” definition of fiduciary investment advice in the DOL’s proposed fiduciary regulation. The other two definitions of fiduciary status are covered by my posts The New Fiduciary Rule (5) and The New Fiduciary Rule (6).

The proposed definition of non-discretionary fiduciary advice is a material change from the current regulation because it eliminates the 5-part test, including the requirement that advice be given to the particular retirement investor on a “regular basis.” In other words, a one-time recommendation can be fiduciary advice under this definition. (The definition is somewhat more demanding that just “one-time advice,” but I will refer to it as one-time advice for purposes of this article. If you want to know more about the detailed definition, look at my last post.)

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The New Fiduciary Rule (6): The Fiduciary Definition of Fiduciary


DOL, fiduciary, investment adviser, IRA
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The US Department of Labor has released its package of proposed changes to the regulation defining fiduciary advice and to the exemptions for conflicts and compensation for investment advice to plans, participants (including rollovers), and IRAs (including transfers of IRAs).

Key Takeaways

  • The Department of Labor’s proposed regulation defining fiduciary investment and insurance/annuity advice to private sector retirement plans, participants in those plans, and IRA owners (collectively, “retirement investors”) includes three distinct definitions.
  • Those definitions are: discretionary investment management, non-discretionary investment advice, and acknowledgement of fiduciary status. In each of those cases, the person and the firm will be fiduciaries under ERISA and the Internal Revenue Code for purposes of their investment recommendations and services to retirement investors.
  • A new definition in the proposal, and one that is not likely to be controversial, is the third one….a person will be a fiduciary for investment recommendations if that person says that the person and/or the firm are acting as fiduciaries for the recommendation.

This post discusses the “fiduciary acknowledgement” definition of fiduciary investment advice in the DOL’s proposed fiduciary regulation. More specifically, the proposed regulation says that a person will be an ERISA and Code fiduciary if “The person making the recommendation represents or acknowledges that they are acting as a fiduciary when making investment recommendations.” (There will be future articles discussing “investment recommendations”, but for the moment, consider it to be a recommendation for a retirement investor to invest in securities, insurance or other property.)

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