Top 5 Highlights of the New DOL PTE 2020-02 Requirements

Wondering how the new DOL PTE 2020-02 requirements apply to investment advisers already acting as fiduciaries? Read on.

On January 31, the U.S. Department of Labor (DOL) will start enforcing Prohibited Transaction Exemption (PTE) 2020-02, the new rule for investment advice fiduciaries concerning the rollover and retirement plan advice they provide. Later this year, on June 30, the DOL will start enforcing the documentation and disclosure requirements for rollover advice specifically.

Regulatory changes are often complicated and confusing, especially for independent investment advisers who are already acting as fiduciaries. The bottom line is that RIA firms, independent or not, must understand and adhere to the new DOL PTE 2020-02 requirements. Although investment advisers already meet their fiduciary duty under SEC regulations, the DOL has stated they must take extra measures to comply with PTE 2020-02.

The DOL has outlined a series of exemptions and FAQs to clarify these requirements. As you navigate the new rollover fiduciary rule and prepare for the upcoming January 31 and the ultimate June 30 deadline, keep these highlights in mind.

1. Adopt and Implement Updated Policies and Procedures

Any regulatory change should prompt a review of existing policies and procedures. Make sure you understand the new rollover fiduciary rule and update your policies manual accordingly. Most importantly, investment advisers need to follow their policies and procedures after updating them. 

2. Comply with the Impartial Conduct Standards

The Impartial Conduct Standards require advisers to act in investors’ best interest, charge reasonable fees, and avoid misleading statements about investment transactions and related matters. RIA firms should already be complying with the Impartial Conduct Standards. Like the advice to maintain and enforce updated policies and procedures, this is a reminder of a regulatory obligation you should already be meeting.

3. Provide Written Disclosure to Clients

Given the new rollover fiduciary rule, take a close look at your existing disclosures. Advisers must disclose the scope of their relationship with investors and any material conflicts of interest. Also, it’s crucial to acknowledge your fiduciary status.

4. Provide Written Disclosure to Investors About Why the Rollover Recommendation Is in Their Best Interest

Make sure your disclosures clearly explain the reasons why a rollover is in your clients’ best interest. That explanation needs to be documented and disclosed on every single rollover recommendation you make to investors.

5. Conduct an Annual Retrospective Review 

The purpose of this retrospective review is to catch any errors and any conflicts that occur as part of the rollover process. Periodically testing your policies and procedures can help ensure you’re meeting regulatory obligations.


If you need help navigating the new DOL PTE 2020-02 requirements, please get in touch. We’d be happy to hear from you.


Parham Nasseri, VP Regulatory Strategy, InvestorCOM

Parham Nasseri’s career spans the intersection of wealth management regulation, innovative technology, and consulting solutions. He is currently the VP of Regulatory Strategy at InvestorCOM, a leading RegTech provider, and has held leadership roles in a Canadian regulatory organization (OBSI), where he led the data and investment analysis team.

Parham serves as a Strategic Advisor to a range of organizations including the Canadian RegTech Association, Junior Achievements and CFA Societies of Canada. He holds a CFA Charter and an MBA from Schulich School of Business.


Article based on an interview of Parham Nasseri, InvestorCOM by our friends at Joot, a provider of regulatory compliance platform technology and services for RIAs, broker-dealers and funds.
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