The ERISA consultants at the Learning Center Resource Desk, which is available through Columbia Threadneedle Investments, regularly receive calls from financial advisors on a broad array of technical topics related to IRAs and qualified retirement plans. A recent call with a financial advisor in Pennsylvania is representative of a common question related to the Securities and Exchange Commission (SEC). The advisor asked:
“I overheard a comment about the “ReTIRE initiative.” What is it and who is behind it?”
Highlights of Discussion
- What better name for an examination program designed to help insure retail investors have adequate assets upon which to retire than “ReTIRE Initiative,” short for Retirement-Targeted Industry Reviews and Examinations Initiative.
- On June 22, 2015, the Securities and Exchange Commission (SEC) launched its multi-year ReTIRE Initiative to keep its promise of focusing examinations on “matters of importance to retail investors and investors saving for retirement.” (OCIE, “Examination Priorities for 2015,” Jan. 13, 2015)
- Under the ReTIRE Initiative, the SEC’s Office of Compliance Inspections and Examinations (OCIE), through its National Examination Program (NEP), will conduct examinations of SEC-registered investment advisers and broker-dealers. The examinations will focus on certain 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 SEC hopes that knowledge of its ReTIRE Initiative will “encourage registrants to reflect upon their own practices, policies, and procedures in these areas and to promote improvements in their supervisory, oversight and compliance programs, as deemed appropriate.”
- In its Risk Alert about the ReTIRE program, the SEC gave some clues as to which registrants would be most likely to fall under investigation and what areas will be scrutinized. The SEC plans to use data analytics, information from prior examinations and examiner-driven due diligence to identify registrants for examination.
- There are four primary areas upon which the examinations will focus: reasonable basis for recommendations, conflicts of interest, upervision and compliance controls, and marketing and disclosure.
Conclusion
SEC-registered investment advisers and broker-dealers should consider the SEC’s announcement of its ReTIRE Initiative as an opportunity to review current practices, policies and procedures and identify any shortfalls, correcting them before being faced with a formal examination.
The Learning Center Resource Desk is staffed by the Retirement Learning Center, LLC (RLC), a third-party industry consultant that is not affiliated with Columbia Threadneedle. Any information provided is for informational purposes only. It cannot be used for the purposes of avoiding penalties and taxes. Columbia Threadneedle does not provide tax or legal advice. Consumers consult with their tax advisor or attorney regarding their specific situation.
Information and opinions provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Columbia Threadneedle.
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