Rollover Recommendation

Why rollovers draw special scrutiny

A rollover from an employer plan to an IRA can materially benefit a client (more investment options, consolidation, professional advice) or materially harm them (higher fees, loss of plan-specific protections, reduced creditor shielding). The SEC and DOL have flagged rollover recommendations as a recurring source of conflicts and have required specific documentation.

What the documentation must show

1. The specific reasons the rollover is in the client's best interest.
2. Comparison of fees between the existing plan and the recommended destination.
3. Comparison of investment options and services.
4. Consideration of plan-specific features that would be lost (loan provisions, protected creditor status, age-55 rule, in-plan distributions).
5. Disclosure of conflicts — any compensation the advisor receives that depends on the rollover happening.

What examiners look for

• Side-by-side cost comparison documented in writing, not just the recommendation.
• The plan's actual fees (often documented in the SPD or 408(b)(2) disclosure) — generic comparisons are flagged.
• Discussion of plan features the client gives up.
• The client's acknowledgment of the analysis.

Common deficiencies

• Generic "rollovers offer more flexibility" rationale without firm-specific cost comparison.
• No documentation of the plan fees being compared against.
• Conflict disclosure missing or buried.
• No record of the client receiving and acknowledging the analysis.

How StratiFi thinks about rollover recommendations

Rollover recommendations are one of the most heavily examined recommendation types in retail advisory. The firms that hold up under examination treat them as a workflow with required artifacts — the cost comparison, the feature analysis, the conflict disclosure, the client acknowledgment — connected to a defined recommendation file. Done well, the rollover record is the easiest part of an examination, not the hardest.