The Rollover Conflict: Ethics in Retirement Income and Rollover Advice

About the course

When a client retires, an IAR is usually paid only if the client moves her money. Assets left in a former employer’s plan generate no advisory fee; assets rolled into an IRA the IAR manages generate one for decades. The decision is large, hard to reverse, and made by a client who has little experience and limited ability to recover from a mistake. That combination makes rollover and retirement income advice one of the most ethically demanding parts of an IAR’s work. This course examines that situation as a question of professional ethics. It explains why the duties of care and loyalty exist and what they require before, during, and after a rollover recommendation. It covers the conflicts that arise from asset-based fees, including the less-noticed conflicts that discourage annuities, Social Security delay, and spending. It addresses disclosure a client can use, steps an IAR and a firm can take to reduce a conflict’s influence, the added care owed to vulnerable clients, and honest communication about projections, guarantees, and the limits of an adviser’s knowledge. Four case studies ask the IAR to apply judgment where more than one response could be defended. Throughout, the course asks three questions drawn from NASAA’s guidance on ethics content: why the duty exists, how the IAR’s conduct affects the client, and how to apply judgment when the facts are unclear. A companion Products and Practice course, From Savings to Income: Retirement Income and Rollover Recommendations, covers the products, tax rules, and mechanics. The two courses do not repeat each other.