IRA rollover under DoL rule: Where to start?

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ORLANDO, Fla. – Many advisers are having a problem figuring out where to start preparing for the impending DoL fiduciary rule. When it comes to IRA rollovers, industry experts believe they already have the answer.

“How do you document in a sufficient manner that the recommendation you made was the right thing for the client?” asked Theresa Fry, manager of IRA and retirement plans at Benjamin F. Edwards, speaking at Pershing’s Insite conference. “I think that’s a huge challenge.”

While many advisers are still determining how the DoL rule will impact the way they do business, Fry makes it clear that regulatory agencies are going to want to see documentation to prove that the adviser is acting as a fiduciary when dealing with any retirement accounts, including IRA rollovers.

One aspect of the DoL rule allows advisers to educate clients rather than give a recommendation. However, many in the industry debate over what exactly that means.

“I think it’s going to be very hard for you to provide education without giving a recommendation,” said Hans Schemmel, director of individual retirement products and annuities at Pershing.

He went on to explain that this is why documenting these conversations and transactions with regard to IRA rollovers will be such a critical aspect for advisers moving forward.

“The department certainly doesn’t give us a lot of framework around some of the softer issues,” said Fry. Her fear is that in the adviser industry it is not currently customary to document the holistic side of advice, which is what the DoL will be looking for when asking firms about their recommendations regarding IRA rollovers.


Noting the challenge advisers face with the amount of products available for IRA rollovers and the documentation needed, Fry believes many firms may turn to technology.

“You have to be able to compare all the services of all the products that you can offer through an IRA,” she said. “And you have to be able to do that in a standardized enough way that you can come to a conclusion of what you recommended was the right thing for this client.”

“Can we create a process that is as simple as an app on your iPhone?” she asked. “Something that you would be able to say, ‘I’m doing rollovers, this is exactly what I have to capture in that process.’”

Sam Ghazaleh, head of Investor Channel at Voya Financial, agreed with Fry, saying that advisers should be looking for help from their technology when documenting all aspects of advising clients about an IRA rollover. However, while Fry has mentioned her desire for a new piece of technology, Ghazaleh said that many advisers don’t have to look far.

“The technology is out there for documenting this stuff,” he said. “I think technology will end up becoming a much more important part of being able to create a consistent way of documenting things.”

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