The Securities and Exchange Commission is making good on the exam priorities it pledged early in 2015.
One of those priorities was to take a closer look at how RIAs comply with the Advisers Act when it comes to overseeing their clients’ assets in 401(k) and IRA accounts.
The SEC’s Office of Compliance Inspections and Examinations (OCIE) began on-site examinations at the end of November 2015.
Those registered investment advisors selected for this year’s exam sweeps are required to provide detailed information on advisors with retirement-specific titles or professional certifications. Advisors undergoing exams will have to turn over marketing material and sales scripts relating information on 401(k) distribution options for clients.
Also, advisors will have to prove to SEC examiners how they revealed the costs and potential conflicts of interest relating to clients’ retirement assets, including if or when a rollover of 401(k) assets to an IRA was recommended.
The SEC is also concerned with how thoroughly RIAs are breaking out the cost of specific investment options, including nuanced descriptions that go beyond an investment’s expense ratio to cover relevant information on revenue sharing, loads, commissions and any other charges.