Comments to the Department of Labor from the Retirement Advisor CouncilCall For Modifications To The Best Interest Contract Exemption

East Granby, CT – July 21, 2015 Comments to the Department of Labor from the Retirement Advisor Council Call For Modifications To The Best Interest Contract Exemption

The Retirement Advisor Council submitted to the Department of Labor its comments regarding the proposed definition of the term “Fiduciary”; Conflict of Interest of Interest Rule.   In its comments, the Council lauds the Department of Labor for taking on the task of clarifying the term “fiduciary” under ERISA with the ultimate objective of expanding participant access to professional help at the critical time of distribution. The Council also identified enhancements that will strengthen the regulation. The Council’s comments are posted at: Comments

Among the edits the Council requested from the Department of Labor:

  • Modification of the Best Interest Contract exemption that allows advisors to provide participant counseling at the time of a distributable event so the contract is only required at the time of transaction
  • Expansion of distinction between small plans and large plans to recognize economically feasible service levels in each segment
  • Inclusion of product information (in particular Qualified Default Investment Alternatives) in the definition of participant education
  • Expansion on the situation of plan sponsors who do not use the services of a fiduciary plan advisor for investment advice, investment array construction, participant education or participant advice
  • Acknowledgement that fiduciary investment advice is a process delivered overtime, not a one-time transaction
  • Acknowledgement that the evaluation of investment options involves more than price, especially for participants eligible for a distribution of plan assets upon involuntary termination, disability, or retirement
  • Gaining a thorough understanding of the plan as well as the plan sponsor’s circumstances and benefits philosophy
  • Supporting the plan sponsor with investment provider due diligence, by reviewing specific investment options periodically, and helping to formulate an Investment Policy Statement
  • Supporting the plan sponsor with service provider due diligence, by monitoring the fulfillment of services by the service provider and ensuring that the plan is administered according to applicable laws, regulations and stated policies
  • Assisting with the design, implementation and review of the fiduciary process
  • Helping the plan sponsor understand the fees charged by service providers, investment providers and other plan partners
  • Ensuring that plan participants have access to the education, communication, and services they need in order to make informed decisions

It is unrealistic to think every American worker can accumulate and manage adequate retirement savings without expert assistance. The DOL is right to require that such assistance come only from those willing to put their client’s best interest first.” says Brian D. Dillon AIFA™, ChFC®, President, Positive Retirement Outcomes, LLC

The Council recognizes the need for professional standards regarding the recommendations fiduciary advisor make to retirement plan participants at the time of a distributable event, but responsibilities of a fiduciary advisor encompass a great deal more than counseling participants:

Several studies document benefits of partnering with a Professional Retirement Plan Advisor for plan sponsors and their participants. However, not all plan sponsors have access to or choose to avail themselves of an advisor. In its comments, the Council recommends the Department of Labor 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.

About the Council

The Retirement Advisor Council is a national organization that advocates for successful qualified plan and participant retirement outcomes through the collaborative efforts of experienced, qualified retirement plan advisors, investment managers and defined contribution plan service providers.  To advance its mission, the Council undertakes initiatives in the areas of research, public relations and promotion, general public education, regulatory positions and practice management.  The Council accomplishes this mission by:

  • Identifying duties, responsibilities, and attributes of the Professional Retirement Plan Advisor.
  • Sharing professional standards with plan sponsors who are responsible for the success of their plans.
  • Providing collective thought capital to decision makers, product providers, legislators and the public.
  • Giving voice to the retirement plan advisor community
  • Offering tools to evaluate advisors to ensure the quality of services provided