Secure Act 2.0 Means Changes for Broker-Dealers and Registered Investment Advisors

By Casey Dougherty

tennis ball on court

At the end of 2022, Congress passed, and President Biden signed into law, the Secure 2.0 Act. In addition to other goals, the Secure Act of 2022 is designed to encourage retirement savings, create greater access to employer-sponsored retirement plans, and fixes a few issues with Pooled Employer Plans (PEPs) which were concerning to plan sponsors.

Portions of the Act were immediately effective, and don’t just impact pension plans, plan sponsors or investment companies – they also have a direct impact on broker-dealers and RIAs.  The Act makes material changes to retirement plans and saving that is likely to impact a significant percentage of your clients.

Impacts to Broker-Dealers and RIAs

Broker-dealers, RIAs and their Financial Professionals likely now depend on financial plans, software and marketing material that utilize outdated assumptions regarding required minimum distributions (RMDs), limits on Catch-Up contributions, and plan provisions. The software that these firms and their Financial Professionals use may touch both creation of financial plans as well as automated supervision systems.

Because the Secure Act didn’t come from FINRA, the SEC or the DOL – places for which compliance teams have systems for monitoring for changes – it is in a blind spot for many firms. Some firms may mistakenly believe that third party administrators or others are solely responsible for compliance.

Oyster recommends a three-prong approach:

  1. Screen for and update any outdated marketing materials to ensure marketing and recommendations based on materials is current.
  2. Develop and deliver training for Financial Professionals and Supervisors on the Act, including how it impacts clients and prospects and how to update outdated recommendations or plans.
  3. Work with software developers on patches for those systems; create interim client-facing disclosures for essential systems that are now creating financial plans with outdated assumptions.

Is there an upside?

When working to achieve compliance for Secure Act 2.0, leverage the opportunity to get in front of clients or prospects who have outdated plans. RIAs may choose to contact clients with outdated plans and apply a charge for updates, or to discover more assets. It’s also an opportunity to provide some good news to clients – those who already maximize their Catch-Up provisions or are close to RMDs will be excited to hear that they can delay RMDs or contribute more to their plan.

Assess your resources and your implementation plan for Secure Act 2.0 

Who in your firm is the owner of this update?  Compliance, Operations or Legal?  What team will ultimately be responsible for the success?

Oyster Consulting can help with the assessment, planning, coordination and implementation, making sure that your firm is compliant and operationally prepared. Our teams thoroughly reviewed Secure Act 2.0 and the requirements for firms like yours.  We are the partner your firm needs, providing the Project Management, Operations and Training solutions to keep your firm compliant and ahead of the regulatory curve.

About The Author
Photo of Casey Dougherty

Casey Dougherty

Casey Dougherty’s 20 years of experience includes expertise in Compliance and Legal supervision in a shared-services environment, executing broker-dealer to broker-dealer joint work and succession arrangements, and other marketing arrangements covering private placement life insurance, VUL and annuity sales.