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What is considered an "investment recommendation"?

DOL regulations define “recommendation” as “a communication that, based on its content, context, and presentation, would reasonably be viewed as a suggestion that the advice recipient engage in or refrain from taking a particular course of action.”

Criteria include:

  • Was there a “call to action”?
  • Was the communication tailored to the advice recipient?
  • Viewed in the aggregate, do the communications constitute recommendations?

A financial advisor makes an “investment recommendation” when he or she provides recommendations on:

  • The advisability of acquiring, holding, disposing of, or exchanging securities or other investment property OR
  • How securities or other investment property should be invested after the securities or other investment property are rolled over, transferred, or distributed from the plan or IRA OR
  • The management of securities or other investment property, including, among other things, recommendations or investment policies and strategies, portfolio composition, selection of other persons to provide investment advice, or investment management services and selection of investment account arrangements (e.g., brokerage v. advisory) OR
  • Rollovers, transfers, or distributions from a plan or IRA, including whether, in what amount, in what form, and to what destination such a rollover, transfer, or distribution should be made