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October 20, 2014 at 08:13 AM
SAN ANTONIO, Texas – The Department of Labor is likely to hold broker-dealers who chase IRA rollovers to the same fiduciary standards that retirement advisors must meet.
That was the prediction offered Friday by ERISA attorney Fred Reish, who noted that, with an estimated $2 trillion in the 401(k) accounts of baby boomers at stake, regulators are “taking it all very seriously.”
Speaking at the Center for Due Diligence conference, Reish said broker-dealers should brace for tighter rules from the DOL, most likely as part of its wider effort to impose the fiduciary standard on more of the financial services world.
IRAs today hold $6.5 trillion, more than the $5.9 trillion in 401(k)-style accounts.
A recent Bloomberg investigation found that former employees at major companies such as Palo Alto, Calif. -based Hewlett-Packard Co. and United Parcel Service Inc., as well as AT&T, have complained that sales representatives lured them into rolling over their 401(k) nest eggs into unsuitable IRA investments.
The question of whether the DOL will actually find a way to push through a new fiduciary standard has been in doubt this year. However, other regulatory bodies, including FINRA and the SEC, have listed 401(k) distributions and rollovers as among their “examination priorities.”
In other words, with all of the increased scrutiny, there’s a general consensus among industry observers that new rules of some kind are coming, as well as increased enforcement.
