Find the Best DOL PTE Technology For Your Firm

As of July 2022, all elements of the DOL’s Prohibited Transaction Exemption requirements are in force, including the requirement to assess and provide disclosures about rollover recommendations. Broker-dealers and investment advisers that provide advice to plans, plan participants and retirement investors will need to ensure that they are fully compliant with the Exemption’s requirements. This can be very challenging to do without technology support. We have helped clients assess different vendor products and, in this blog, we will discuss how firms can effectively assess the different technology options available from vendors.

The DOL’s PTE 2020-02 has four primary requirements – (a) the impartial conduct standard, (b) disclosure requirements, (c) a compliance requirement and (d) a requirement to conduct annual retrospective reviews. As part of these requirements, when recommending a rollover (e.g., from an employer plan to an IRA, from one IRA to another IRA, etc.), firms must compare the available alternatives to ensure that the recommendation is in the retirement investor’s best interest and must disclose this information to the investor.

As part of the compliance and retrospective review requirements, firms should be monitoring and testing to look for red flags of non-compliance. Trying to comply manually can cause challenges. Using forms that must be manually completed by advisers can make it hard to ensure consistent and compliant results. When using manual forms, it is also difficult to keep track of whether the assessments were conducted and required disclosures were made. Most importantly, to conduct rollover assessments advisers need to have access to plan and/or benchmarking information that can be difficult to come by manually.

As a result of these difficulties, many vendors have created tools to address these challenges. Using such technology can help enforce a consistent workflow, integrate rollover assessments into existing recommendation processes, help ensure required disclosures are being made and capture data for books and records and for monitoring purposes. Knowing which vendors to use depends on your specific needs.

When looking for the right vendor for your organization, there are many factors to consider. First and foremost, a vendor partner must be able to meet the requirements of the Prohibited Transaction Exemption. This includes:

  • documenting the rollover assessment;
  • delivering disclosures;
  • supporting monitoring and compliance; and,
  • ensuring that the bookkeeping requirements are met.

It is important to understand where the vendor obtains plan and benchmarking information. It is also helpful if the vendor’s tool supports your compliance efforts and allows you to quickly identify patterns and trends that could identify potential issues that need to be resolved.

 Another factor to consider is the tool’s flexibility and ease of use. In order to get buy-in and adoption of your advisers, having an intuitive and easy-to-use system will be key. Having an existing relationship with a vendor can provide advantages such as simpler integration, ease of training, and preferred pricing.

In today’s world, API integration into an organization’s technology ecosystem has become a much more streamlined process as well. Depending on how your firm is organized, you may need a vendor that has the flexibility to be run in a decentralized manner with unique user access threads.

Each vendor partner has its own unique pricing model. When looking at pricing, you should consider the straight-up cost per user, whether you will be a heavy user or a light user and whether the tool will be used by home office staff or field staff.  Some firms might want to utilize a vendor that provides both a Reg BI tool along with the DOL PTE 2020-02 tool. This could streamline the process and make it more consistent for your advisers. It is also important to understand and consider the roll out and post-roll out support provided by the vendor partner.

These are just some of the many points to consider when assessing and evaluating potential DOL PTE 2020-02 tools and will go a long way to assisting you in identifying the right partner to help you navigate these important, but tricky requirements.

Oyster’s professionals can help you prepare your procedures, train of your staff, and conduct an assessment of available tools and vendors. We can also assist in conducting the required annual retrospective review.  Our consultants bring experience and perspectives from all areas of the industry. We provide industry intelligence and comparable benchmarks by which your firm can be measured. Oyster will advise you on options and alternatives to fit within your budget and strategic plan.

About The Authors

Ed Wegener is an innovative compliance, risk management and supervisory controls expert with deep understanding of Federal Securities Laws and the rules of self-regulatory organizations, as well as technology optimization and risk mitigation. Prior to joining Oyster, Ed held several posts in FINRA, most recently as  Senior VP and Midwest Regional Director.

David Altschul is a seasoned COO and senior Corporate Executive with over 25 years of Financial Services industry experience developing solutions for operational efficiency through organization-wide digital transformation.

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