Robo-Advisers to Retirement Plans: ERISA Fiduciary Duties and Prohibited Transactions; SEC Guidance and Compliance

A live 90-minute CLE webinar with interactive Q&A


Tuesday, October 17, 2017
1:00pm-2:30pm EDT, 10:00am-11:30am PDT

Early Registration Discount Deadline, Friday, September 22, 2017


This CLE webinar will discuss regulatory compliance issues for robo-advisers who provide investment advice and discretionary management services to ERISA retirement plans and IRAs. Discussion will include ERISA’s fiduciary and prohibited transaction provisions, the Code’s probited transaction provisions, and recent SEC guidance for robo-advisers registered under the Investment Advisers Act. The panel will also provide guidance to counsel for plan sponsors on the legal risks and evaluating and monitoring robo-adviser services.

Description

Unlike traditional investment advisers, robo-advisers are digital platforms providing algorithm-driven, automated financial planning with varying levels of, or even no, human interaction with clients. While robo-advisers provide retail investors with affordable investments, guidance and other services, they present unique regulatory challenges.

Robo-advisers providing services to ERISA-covered retirement plans must comply with ERISA’s fiduciary duty and prohibited transaction provisions,and the prohibited transaction provisions under the Internal Revenue Code. Robo-advisers providing services to IRAs must comply with the Code’s prohibited transaction provisions.

Further, the SEC’s 2017 Guidance Update confirms that robo-advisers registered with the SEC are subject to the substantive and fiduciary obligations of the Advisers Act. Requirements can include special disclosures by robo-advisers, including any unique aspects of its business model, functions performed, risks presented, and the degree of third-party and human involvement in its services.

Counsel to robo-advisers must ensure strict compliance with required disclosures in their online platforms, offering materials, and client questionnaires. Counsel to retirement plan sponsors must be prepared to evaluate robo-adviser services, contracts and disclosures.

Listen as our panel of ERISA and Adviser Act attorneys guides you through the regulatory compliance scheme for robo-advisers under ERISA, the Code, the Advisers Act and the regulatory requirements of the DOL, the IRS and the SEC. The panel will discuss ERISA fiduciary and prohibited transaction provisions applicable to robo-advisers and recent SEC guidance for robo-advisers registered under the Investment Advisers Act.

Outline

  1. ERISA compliance issues
    1. What is a robo-adviser?
    2. Robo-adviser fiduciary status under ERISA and the IRC
    3. Exclusions from “investment advice”
    4. Fiduciary duties under ERISA
    5. Application of prohibited transaction provisions
    6. Exemptions and DOL guidance
  2. SEC compliance issues
    1. Robo-advisers and the automation of investment advisory services
    2. Issues presented by the lack of human involvement
    3. SEC guidance and updates
    4. FINRA Report on Digital Investment Advice
  3. Best practices for robo-advisers—disclosure, suitability and compliance under the Advisers Act
  4. Perspectives and issues for plan sponsors

Benefits

The panel will review these and other key issues:

  • How do the fiduciary duty and prohibited transaction provisions of ERISA and the IRC apply to robo-advisers and their services?
  • What are the prohibited transactionexemptions most likely to be used by robo-advisers?
  • What kinds of disclosures does the SEC require for robo-advisers, and where should they appear?
  • What are best practices for compliance with the Advisers Act according to recent SEC guidance and the 2016 FINRA report?

Faculty

Margaret Sheehan, Partner
Ashurst, Washington, D.C.

Ms. Sheehan concentrates her practice on counseling investment advisers, broker-dealers and other financial institutions on all matters relating to the development and offering of investment products and services. Her clients include domestic and global asset management firms, broker-dealers, banks and insurance companies. She has extensive experience representing clients in their dealings with the SEC, state securities regulators and self-regulatory organizations and advises clients on the Dodd Frank Act. She also specializes in the regulatory issues associated with private investment companies.

William H. Woolston, Partner
Covington & Burling, Washington, D.C.

Mr. Woolston’s practice focuses on all aspects of employee benefits and executive compensation for companies in a variety of industries. His practice concentrations include tax-qualified retirement plans, with a particular emphasis on “hybrid” defined benefit plans like cash balance and pension equity plans; domestic U.S. and global equity incentive programs; non-qualified deferred compensation plans subject to Section 409A of the Internal Revenue Code; executive employment agreements, retention and bonus agreements, and other similar incentives; and post-closing employee benefits, executive compensation, and human resources integration.

David C. Kaleda, Principal
Groom Law Group, Washington, D.C.

Mr. Kaleda's broad range of experience includes handling fiduciary matters impacting plan sponsors, investment and other fiduciary committees, investment managers/advisors, recordkeepers, broker-dealers, banks and other financial services firms. He advises clients on the avoidance and resolution of prohibited transaction issues, the structuring of alternative investment funds, and day-to-day compliance issues arising under ERISA and the Internal Revenue Code. He also counsels clients on compliance with the Department of Labor’s final “investment advice” regulation and related exemptions. 


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