Comments regarding proposed Definition of the Term “Fiduciary”; Conflict of Interest Rule – Retirement Investment Advice

July 20, 2015

RIN 1210-AB32 DOL Comments Final-1The Council commends the Employee Benefits Security Administration for taking on the task of clarifying the term “fiduciary” under the Employee Retirement Income Security Act of 1974 (ERISA). To achieve a successful retirement, the vast majority of participants require some sort of professional help, particularly at the critical time of distribution when the potential loss of retirement readiness is great.

Professional Retirement Plan Advisors are in a unique position to deliver the assistance participants need at the time of a distributable event because of their knowledge of the plan, of the participants and, their commitment to abide by established professional standards. For this reason, the Council argues that participant guidance provided at the time of a distributable event by Professional Retirement Plan Advisors that have a relationship with the plan should be exempt from prohibited transaction status. The current proposal gives close attention to this issue and we are grateful for the clarifications.

On the other hand, the Council believes the final regulation needs to be enhanced from the current proposal in nine areas:

  1. Recognize the full scope of the fiduciary duties of a Professional Retirement Plan Investment Advisor
  2. Acknowledge that the evaluation of investment options involves more than price comparison
  3. Overcome the preconceived notion that advisors are necessarily conflicted
  4. Acknowledge that fiduciary investment advice is a process delivered over time, not a one-time transaction
  5. Modify the proposed Best Interest Contract exemption so the contract is required only at the time of transaction
  6. Expand on the distinctive practices for small plans and large plans
  7. Recognize the full scope of participant education including investment product information, and QDIAs that mirror asset allocation models
  8. Expand on the situation of plan sponsors who do not use the services of a fiduciary plan advisor and rely exclusively on the services of their recordkeeping service provider for investment advice, investment array construction, participant education or participant advice
  9. Address the impact (if any) of sub-transfer agent compensation for providing shareholder services on the fiduciary status of investment managers

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