Phyllis Borzi: DOL's New Rollover Rules a 'Reasonable Step Forward'

Where are firms in their compliance?  

I have heard that many firms have been making genuine good faith efforts to come into compliance with the DOL rules, so they should be OK.

I also have heard that there are firms that have either continued to be oblivious to these requirements or have delayed compliance and have just begun to prepare, mistakenly thinking that it would all go away or that they could hire someone to provide an off-the-shelf compliance plan and disclosure template.

What are the biggest questions advisors/broker-dealers have about the July 1 compliance date? 

The questions I get generally fall into two categories: (1) Will DOL further extend the compliance date; and (2) What will DOL enforcement look like? With respect to the substance of compliance, the key issue seems to be how specific the DOL will insist that the "specific reasons" why a rollover recommendation is in the best interest of the investor be.

I'm still hearing that some firms think that "greater investment choice" will be sufficient, even though the DOL has clearly said that won't be.

Also, there are firms who think that having to do some research on what the participant's current choices and fees are is unnecessary, even though DOL has indicated that may be required to be able to justify a rollover recommendation.

I have heard that a few firms are trying to figure out how to avoid making a rollover recommendation by attempting to argue that the client is initiating the rollover and therefore they are just responding to a client request. I doubt that this strategy will be effective because the question of whether a recommendation has been made relies on an examination of the facts and circumstances of the situation.

Pictured: Phyllis Borzi (Courtesy photo)