A recent case involving Transamerica Retirement Advisors, a registered investment adviser, offers a cautionary example of the importance of clarity in the world of regulatory compliance. The firm, which provides investment education and managed account services to participants in employer-sponsored retirement plans, fell afoul of its fiduciary obligations.
According to the SEC, Transamerica failed to adequately disclose conflicts of interest tied to incentive payments it made to its investment adviser representatives. These representatives received bonuses linked to encouraging plan participants to roll over retirement assets into accounts managed by Transamerica itself.
Compounding matters, the firm’s services were intertwined with record-keeping functions performed by a Transamerica affiliate, creating layers of entanglement that were left insufficiently transparent to clients.
Incentive compensation
The seeds of Transamerica Retirement Advisors’ troubles were sown as far back as 2017. That year, the firm, a registered investment adviser, began offering incentive compensation to its Retirement Planning Consultants for steering employer-sponsored plan participants toward in-house advisers at the Transamerica Advice Center.
These advisers, in turn, received their own bonuses for persuading participants to transfer retirement savings into Transamerica-managed accounts.
Although this incentive structure presented obvious conflicts of interest, clear disclosure to clients was conspicuously absent. For years, Transamerica offered only vague assurances that incentives “may” exist, language that belied the active, ongoing payment schemes in place.
The numbers paint a stark picture.
Between June 2017 and February 2022, the period now under scrutiny, roughly 7,300 plan participants rolled over a combined $1.2 billion into Transamerica advisory accounts without being properly informed of the underlying conflicts.
Throughout this time, the firm failed to establish compliance policies capable of addressing these risks, a lapse that ultimately exposed it to charges under Sections 206(2) and 206(4) of the Advisers Act, as well as Rule 206(4)-7.
Where clear and timely disclosure might have preserved client trust, obfuscation and structural opacity prevailed.
Regulatory assets
Transamerica Retirement Advisors is no small player. A Delaware-based limited liability company, it has held investment adviser registration since 1992 and reported some $12.7 billion in regulatory assets under management as of mid-2024.
Its business model is tightly interwoven with its parent, Transamerica Retirement Solutions, which provides recordkeeping and administrative services to thousands of employer-sponsored retirement plans across the United States.
By the end of 2021, Transamerica’s reach extended to roughly 1.5 million plan participants through around 9,400 employer-sponsored plans, a scale that made any compliance failures a matter of considerable consequence.
At the heart of the issue lay a complex web of service offerings. While Transamerica offered basic investment education within employer plans, it simultaneously promoted managed portfolio products, such as Personalized Portfolios and third-party money management programs, to retail clients outside the confines of workplace retirement structures.
Advisers from the Transamerica Advice Center were tasked with guiding participants through the decision to remain in their existing plans or to roll over into retail advisory accounts, often benefiting the firm through asset-based advisory fees.
Yet the system also created strong incentives for Retirement Consultants to funnel participants toward these revenue-gathering paths, despite being technically barred from giving direct investment advice.
The result was a delicate dance, part education, part salesmanship, that regulators found crossed the line from guidance into self-interested promotion.
Allegations and course correction
During the period under review, Transamerica Retirement Advisors operated an incentive system that nudged its personnel toward generating profitable rollovers, often without adequately flagging the conflicts involved.
Retirement Consultants were rewarded for referring employer plan participants to Transamerica’s in-house advisors, with variable bonuses tied partly to the volume of referrals. Meanwhile, Transamerica Advice Center (TAC) Advisors earned commissions directly correlated to the assets that participants ultimately transferred into advisory accounts.
Although technically framed as performance metrics or engagement bonuses, the structure provided unmistakable financial motivations to guide participants toward courses of action that benefited the firm’s bottom line.
While Transamerica did inform participants about the costs and features of its investment products, it conspicuously failed to reveal the underlying incentive arrangements.
Disclosure, the keystone of fiduciary duty, lagged far behind these compensation practices. While Transamerica did inform participants about the costs and features of its investment products, it conspicuously failed to reveal the underlying incentive arrangements influencing its recommendations.
Instead, client materials used cautiously ambiguous phrasing, suggesting that advisers “may” receive rewards such as incentive trips, without candidly addressing the financial compensation linked to rollover transactions.
Only after the SEC opened an investigation did Transamerica update its disclosures in early 2022, amending brochures to admit that Retirement Consultants and TAC Advisors were indeed compensated in ways that created conflicts of interest. This prompt revision, while belated, was a constructive step that likely softened regulatory censure.
The firm’s compliance framework proved similarly fragile. Throughout the relevant period, Transamerica Retirement Advisors lacked written policies and procedures sufficient to detect or mitigate the risks created by its incentive structures.
Even after introducing a nominal annual review process in 2018, the firm failed to identify and fully disclose the critical gaps in its conflict management approach.
The matter has been settled through an SEC administrative proceeding, with Transamerica agreeing to an Amended Offer of Settlement without admitting or denying the findings.
A matter of clarity
Recent SEC enforcement actions, spanning Transamerica Retirement Advisors, One Oak Capital Management, Momentum Advisors, and Cetera Investment Advisers, highlight a troubling pattern: fiduciary duty breaches often arise not through dramatic acts of fraud, but through subtle, systematic failures of disclosure, supervision, and loyalty.
The facts of each case differ, but a single thread connects them: clients were left in the dark at critical decision points where transparency was legally, and ethically, obligated.
What distinguishes the Transamerica case is not only the breadth of affected clients, thousands of retirement savers, but also the fact that the firm promptly revised its disclosures once the SEC initiated its investigation.
This responsiveness stands in contrast to the One Oak Capital Management, where elderly clients were persuaded to convert commission-based brokage accounts into higher-fee advisory accounts without any new services, while the adviser, Michael DeRosa, failed to disclose his enhanced compensation.
Momentum Advisors illustrates a more direct internal breach. Its former Chief Compliance Officer and Chief Operating Officer misappropriated portfolio company assets, spending client funds on luxury purchases and personal debts. The SEC faulted the firm not just for the misconduct itself, but for lacking basic policies that might have detected or prevented it.
Meanwhile, in the cherry-picking scheme cases against Cetera Investment Advisers and First Allied Advisory Services, adviser representatives manipulated trade allocations for personal gain, executing profitable trades for themselves while saddling clients with losses. Despite official policies prohibiting such behavior, ineffective supervision allowed the schemes to flourish undetected for years.
Across all these cases, the underlying failure was not merely bad behavior, it was opacity.
Whether through omission, euphemism, or negligent oversight, firms allowed environments where clients could not clearly grasp how their advisers’ financial interests might diverge from their own.
The regulatory actions thus serve as a collective indictment of any practice that leaves room for misunderstanding where fiduciary duty demands absolute clarity. Only by offering a mirror-like clarity, where the true motivations behind recommendations are unmistakable, can firms genuinely fulfill the high standards fiduciary law demands.
