What Does the SEC Regulation Best Interest Mean for Rollover Advice? July 3, 2019

The SEC's Regulation Best Interest, which prohibits broker-dealers and certain other advisors from providing conflicted advice, among other things, also applies to transactions involving rollovers between retirement accounts. The rule clearly states that the best interest standard will now apply to rollovers from employer-sponsored plans into IRAs. Because of this, advisors who make this type of recommendation will now be required to establish that the rollover was in the client's best interest. This can be accomplished in a number of ways, including by showing that the advisory services provided by the advisor with respect to the IRA add value as a tool for meeting the client's goals. In other situations, investment options and investment mix in the rollover IRA may better suit the client's goals. Ultimately, the SEC may provide additional guidance on the best interest standard with respect to rollovers. In the alternative, its eventual enforcement of the rule may provide clarity for advisors. For more information on the SEC rule, visit Tax Facts Online.