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Reprinted from the Fall 2016 issue of ASPPA’s Plan
Consultant magazine. The American Society of
Pension Professionals & Actuaries (ASPPA) is a part
of the American Retirement Association. For more
information about ASPPA, call 703.516.9300 or visit
www.asppa-net.org.
The New Fiduciary
Rule’s Effect on Call
Center Staff
How will providers cope with the new liabilities associated with
allowing call center employees to answer questions regarding
rollover and distribution options?
BY MARY ONEYEAR
W
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PLAN CONSULTANT | FALL 2016
hen the DOL’s new fiduciary rules take effect in April 2017, call center personnel
will be faced with many new challenges. Quite possibly, the largest and most
complex will be how to handle participant questions and conversations on
rollovers. It is likely the current practice of most call centers would cause them
to be fiduciaries under the new rules. If a call center representative provides
investment advice to the participant, the service provider (and the employee) will
become a fiduciary under ERISA.
Of course, with fiduciary status comes fiduciary liability. How will retirement
plan providers react? How will these changes affect their organization and/or their
relationship with advisors? What new training will be needed? How will providers
and advisors service plan sponsors and participants in this new landscape?
To determine what is now investment advice under ERISA, the new
fiduciary rules set forth a broad definition specifically targeting conversations
about rollovers. In general, a person will be considered to have provided
investment advice to a participant when the person receives a fee (direct or
indirect) for providing a “recommendation” concerning rollovers. This includes
whether or not to roll over, what
amount to roll over, the form of
rollover, and which service provider
to utilize.
Two key determinants are
whether the communication is
a “recommendation” and the
context of the conversation. A
recommendation is generally
defined as a communication that
someone would reasonably perceive
as a suggestion to take (or not take)
a particular course of action. So
imagine that a participant calls a
TPA about a distribution and the call
center employee suggests a rollover
to a particular IRA provider where
the IRA provider pays a fee to the
TPA for new accounts referred. The
TPA itself (and the employee) will
be deemed to be a fiduciary under
ERISA for providing investment
advice to the participant.
A result that may become common
is to no longer accept IRA referral fees
and focus on educating participants
about their rollover options. Per the
new rules, the DOL has mostly kept
what was considered education under
DOL Interpretive Bulletin 96-1.
Allowable education can include
reviewing available distribution
options and the features of those
options. This means a call center
employee will be able to present the
different options available without
becoming a fiduciary.
This tightrope walk between
education and advice is not new
to the call center environment.
This is a similar line that’s been
taken in the past when discussing
investments. Call center managers
train their employees to stay away
from providing investment advice.
Additional training will certainly be
needed on how to comply with the
new regulations, and this additional
training is sure to put added cost and
staffing strains on providers.
NO MORE ADVICE
Even with additional training,
the liability of allowing call center
employees to answer questions
regarding rollover and distribution
options could prove too much for
some providers. Most call center
employees have spoken to participants
who have absolutely no idea what
do to about their distribution and
are asking, and maybe even begging,
for guidance. Human nature makes
it hard not to sympathize with the
participant and offer assistance. If
this service has become frequent and
routine, it may be an expectation of
participants to learn their distribution
options and hear advice on possible
next steps. Ending this type of service
without proper plan sponsor and
participant education may be viewed
as a decrease in service and value.
Therefore, care should be taken to
design your communications around
informing and educating relevant
parties on the new regulations and
how they affect the new service
model.
EMPLOYEES WITH SPECIAL
TRAINING
TPAs and providers may assign a
specially trained group of employees
to lead the rollover conversations.
This is a current practice for some
TPAs, as retention specialists are
already utilized in speaking with
participants on keeping their funds
in the plan or rolling over to a
proprietary IRA.
to this, it is possible more participants
will leave their money in the plan
after leaving employment, especially
those with small account balances.
From the perspective of a TPA or
plan sponsor, this may result in more
participants to track, an increased
potential of a plan audit, and more
annual notices to mail.
DATA GATHERING AND
LOGISTICS
Providing recommendations also
opens up the question of logistics.
How will call center employees gather
the information required to provide
a responsible recommendation that is
in the best interest of the participant?
Having to act in the best interest of
the plan participants will mean more
time is needed to collect and analyze
the necessary information. Staffing,
systems and processes may be an issue.
Some commentators believe this
reality will lead to more growth in
the robo-advisory industry.
At this time, call center managers
and employees seem to have many
more questions than answers. It
is certain we will continue to see
more on this topic as the April
2017 effective date approaches. The
challenges and uncertainties call
centers face with the new rules are
numerous, but we believe providers
will rise to the challenge with new
and innovative solutions.
TPAs AND PLAN ADVISORS
Similar to training a certain
group of employees, other call
center employees are trained to
refer participants to the plan’s
retirement advisor. The inclusion
of a plan advisor brings additional
considerations. For instance, if
a plan sponsor is paying all the
administrative fees, could it be
justified to recommend a rollover to a
more expensive IRA? In some cases,
advisors may be relegated to advising
on the funds within a plan. There has
been widespread discussion whether
these new rules will result in advisors
unwilling to work with participants
with smaller account balances. Due
Mary Oneyear, QKA, is a
retirement plan specialist
for Heartland Retirement
Plan Services (HRPS). She
serves clients through her experience in
internal technology systems and trains
staff on all aspects of customer service.
HRPS is a business unit of Dubuque
Bank and Trust Company, a subsidiary
of Heartland Financial USA, Inc.
Products offered through Heartland
Retirement Plan Services are not FDIC
insured, are not bank guaranteed, and
may lose value. Dubuque Bank and
Trust Company is a Member of FDIC.
WWW.ASPPA-NET.ORG
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