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SEC to Scrutinize Retirement Advice

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Fulfilling its promise to protect retirement savers, the Securities and Exchange Commission said Monday that it has launched a multiyear targeted review of investment advisors’ and broker-dealers’ retirement planning sales practices.

The SEC’s Office of Compliance Inspections and Examination’s Retirement-Targeted Industry Reviews and Examinations (ReTIRE) Initiative will zero in on “higher-risk areas” of registrants’ sales, investment and oversight processes, with particular emphasis on select areas where retail investors saving for retirement “may be harmed,” the agency said.

Agency staff, the SEC said in its risk alert, intends to use data analytics, information from prior exams, and examiner-driven due diligence to identify registrants to probe under the initiative.  

Exam focus areas will include whether these RIAs and broker-dealers have reasonable basis for recommendations, whether they are disclosing conflicts of interest and whether proper supervision and compliance controls are in place, as well as marketing and disclosure of products.

As part of the exams or the selection of exam candidates, the SEC notes that OCIE examiners may focus on the activities of investment advisory reps and/or broker-dealer registered reps as well as branch offices.

The SEC said in early January that protecting those saving for retirement would be an exam priority this year along with focusing on registered entities’ branch offices.

Agency examiners will check for advisor/broker-dealer consistency when selecting the type of account; performing due diligence on investment options; making initial investment recommendations; and providing ongoing account management.

Staff will also review registrants’ sales and account selection practices in light of the fees charged, the services provided to investors, and the expenses of such services to evaluate, to the extent applicable and required. Examiners will also look at whether compliance programs identify and address risks associated with the conflicts of interest and material conflicts of interest, such as compensation structures that may incentivize reps to make certain recommendations.

As to assessing these firms’ supervisory and compliance controls, SEC examiners plan to review registrants’ controls, oversight and supervisory policies and procedures and may focus on registrants with operations in multiple and/or distant branch offices and reps with outside business activities.

Registrants’ marketing and disclosure materials that are distributed to investors will also be examined to ensure they’re not deceptive or misleading.


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