w 0 0 0 A R 

Don Woodard, CLU 

Blake Woodard, CLU 

Office of Regulations and Interpretations 

Employee Benefits Security Administration 

U.S. Department of Labor 

200 Constitution A venue NW 

Suite 400 

Washington, DC 20210 

Re: RIN 1210-AB32 & ZRIN 1210-ZA25 

July 21, 2015 

Submitted by e-mail: 

e-ori@dol. gov 

e-oed@dol. gov 

Proposed Definition ofFiduciary; Conflict of Interest Rule for Retirement 

Investment Advice 

Proposed Best Interest Contract Exemption 

Proposed Amendments to Class Exemptions 75-1, 77-4, 80-83, and 83-1 

Ladies and Gentlemen: 

I am an investment representative of a broker-dealer and have served individual investors 

for 20 years. I also provide non-fiduciary compliance and consulting services to 401(k) 

plans and their sponsors. My plan-level401(k) consulting work is done for an hourly 

rate. I have three concerns about the proposed rules: 

1. 401 (k) plan and other qualified plan consultants should not be deemed fiduciaries 

merely because they recommend fiduciaries, such as ERISA 3(38) investment 

managers, to plan sponsors. Plan sponsors are in great need of consultants to help 

them with the burdensome fiduciary and compliance responsibilities of 401(k) plans 

and other qualified plans. Consultants who provide many of these non-investment 

services, such as assisting with plan committee meetings, participant education, 

discrimination testing, and match calculations, should not be drawn into the fiduciary 

world because they assist the plan sponsor with the interviewing and selection of true 

fiduciaries. If these services triggered a fiduciary status, I would no longer assist plan 

sponsors in the selection of ERISA 3(38) investment managers, a service they greatly 

need. 

My opinion is in response to this sentence in the preambles to the Proposed Best 

Interest Contract Exemption and Proposed Amendments to Class Exemptions 75-1, 

77-4, 80-83, and 83-1 that lists the types of activities that constitute "investment 

Suite 600 

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RIN 1210-AB32 & ZRIN 1210-ZA25 

Proposed Definition of Fiduciary; Conflict of Interest Ru1e 

Proposed Best Interest Contract Exemption 

Proposed Amendments to Class Exemptions 75-1, 77-4, 80-83, and 83-1 

July 21, 2015 

Page 2 

advice": "( 4) A recommendation of a person who is also going to receive a fee or 

other compensation for providing any of the types of advice described in paragraphs 

(1) through (3), above." This sentence may have been written contemplating 

investment advisors or representatives who recommend mutual fund or managed 

account managers for qualified plans or IRAs. However, you can see how easily it 

could be interpreted to include non-fiduciary plan consultants who help sponsors 

interview and select ERISA 3(38) investment managers. The plan sponsor certainly 

is performing a fiduciary function in hiring an ERISA 3(38) investment manager. 

However, a consultant paid an hourly or flat fee to assist with the interview process 

and render an opinion on the merits of the candidates interviewed or the wisdom of 

retaining an existing ERISA 3(38) investment manager should not be deemed a 

fiduciary. 

2. While other commenters have expressed their concerns about various aspects of the 

Best Interest Contract Exemption, I believe the key flaw in this exemption is the word 

"best." "Best" is an unattainable standard, an umeachable limit on a hyperbolic 

curve. It would be one thing to have a "Retirement Investors Interest Contract 

Exemption" or a "Retirement Investors Interest First Contract Exemption," but to use 

the word "best" is to guarantee litigation. Not only will the advisor never serve the 

best interest of the investor, but the investor will not even know what her best interest 

is. Ask an investor in 2007 whether they are more interested in growth or principal 

preservation, and they likely would have told you "growth." The same investor in 

2009 likely would have told you "preservation." Investing is a complex process, as 

Section II( c )(1) of the proposed exemption recognizes in its attempt to define what is 

meant by "Best Interest." Best is a toxic word that has no place in the proposed 

exemption. It is the fatal flaw in the proposed regulation; it improves the retirement 

only of litigators who shall feast on it. 

3. This comment deals solely with IRAs and not qualified plans. Wherever this 

regulation goes from here, you must respect existing investments in IRAs. I realize 

that your Proposed Rule contains an "Exemption for Pre-Existing Transactions," but 

this topic is so serious that you must be very careful that your proposed exemption 

eliminates any requirement for a Best Interest Contract in these circumstances. Many 

IRA owners own annuities in their IRAs, both fixed and variable. Variable annuities 

are popular for their lifetime income riders and death benefit guarantees. Other IRA 

owners have mutual funds in their IRAs. Regardless of the investment type, most 

IRA owners value their current investment representatives and advisors. The danger 

with any new IRA fiduciary definition and exemption regulation that does not respect 

existing investment vehicles through some type of grandfathering is that many IRA 

owners will lose their valued investment professional overnight when those 

professionals choose not to meet the requirements of the regulation. The regulation 

will create instant Retirement Orphans. In my practice, I have taken over the 
RIN 1210-AB32 & ZRIN 1210-ZA25 

Proposed Definition of Fiduciary; Conflict of Interest Rule 

Proposed Best Interest Contract Exemption 

Proposed Amendments to Class Exemptions 75-1, 77-4, 80-83, and 83-1 

July 21, 2015 

Page 3 

servicing of variable annuities sold by other investment professionals. These 

annuities have complex lifetime income riders that must be meticulously followed or 

the investors will lose their lifetime guarantees. What good has the Department done 

if I stop serving these individuals, because the cost and liability of the Proposed Rule 

is more than I wish to bear? Sometimes in life, change works best when it starts 

clean, rather than trying to reform the past. Tread very cautiously here, or you will 

cause much irreparable damage in the delicate relationship between the Retirement 

Investor and Adviser. 

Please call me if I can provide more detailed information on these three concerns. 

Sincerely, 

~··· 

Blake Woodard 

William B. Woodard is registered with and securities are offered through Kovack Securities, Inc. Member 

FINRA/SIPC. 1350 Church St Ext NE, 3rd Floor, Marietta GA 30060 (770) 319-1970. Woodard Insurance, 

LLP, is not affiliated with Kovack Securities, Inc.