discuss these comments further with you. Please contact Michael Annin at 312-595-7281 with
respect to any questions regarding the matters discussed herein. Thank you for your time and
consideration.

Sincerely,

Michael Annin, CFA

Senior Managing Director

Investment Strategies

Mesirow Financial

353 N. Clark Street

Chicago, IL 60654

Office: 312-595-7281

E-mail: mannin@mesirowfinancial.com

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As a fiduciary service provider that offers both discretionary and advisory services,
Mesirow understands, and is sympathetic to, the Department's concerns regarding the actions of
certain marketplace participants that purport to provide advice to participants and plans and
avoid liability through contractual or other methods. However, Mesirow is concerned that the
Proposal’s breadth, while an attempt to cure the marketplace of these “bad apples,” will result in
several unintended, but significant, negative consequences in the retirement marketplace. In
particular, Mesirow is concerned that the marketplace will need to undergo a drastic and
substantial change if the Recommendation Provision is finalized as set forth in the Proposal.

Because the term “recommendation” could unintentionally and easily be construed in an
extremely broad manner, there is concern in the marketplace that a recordkeeper would be
considered to provide fiduciary advice simply by making Mesirow and other third party fiduciary
service providers available on their platform. As the Department is well aware, recordkeepers
make significant efforts to avoid fiduciary status given the significant pricing pressures on their
services that would be amplified to a potentially unsustainable level if they were classified as
ERISA fiduciaries. Thus, if the Department does not include bundled service providers in the
Platform Provider Carve-Out, Mesirow suggests that the Department clarify that recordkeepers
and other platform providers who make available additional services on their platform will not be
considered to be making a “recommendation” of those services under the Recommendation
Provision by merely offering them on their platforms.

Using the American Recordkeeping Company example above, American Recordkeeping
Company’s merely offering Mesirow on its platform should not be considered a
“recommendation” of Mesirow’s services. This result should hold true even if the recordkeeper
makes information about Mesirow available to the plan sponsor for their consideration.

Similarly, both the Platform Provider Carve-Out and the Recommendation Provision fail
to address the key role of helpful intermediaries within the marketplace. Plan sponsors and
fiduciaries committees often ask third party administrators, advisors, and other service providers
to recommend fiduciary service providers for their consideration. Mesirow is concerned that
these specialized intermediaries may be considered fiduciaries for other purposes because they,
often out of a desire to help their clients, make recommendations of recordkeeping platforms or
other service providers for services they do not provide. Mesirow suggests that the Department
make it clear that such a recommendation, when no compensation is paid to the intermediary for
that recommendation is not a fiduciary act.

Thus, Mesirow asks that the Department clarify that these recordkeepers and
intermediaries who make recommendations of potentially outsourced fiduciary services, are not
fiduciaries because of these recommendations, This approach will acknowledge and reflect the
key role of the various marketplace participants — from recordkeepers to intermediaries — in
virtually all segments of the retirement market.

* ot *

Mesirow appreciates the opportunity to work with the Department on these issues of
great importance to the American retirement system. We would welcome the opportunity to

Mesirow Financial 4




Mesirow Financial

353 North Clark Street, Chicago, Illinois 60654
312.595.6000 » www.mesirowfinancial.com

July 21, 2015

Office of Regulations and Interpretations
Employee Benefits Security Administration
Attn: Conflict of Interest Rule

Room N-5655

U.S. Department of Labor

200 Constitution Avenue, NW
Washington, DC 20210

Re: Definition of the Term “Fiduciary;” Conflict of Interest Rule -—
Retirement Investment Advice
RIN 1210-AB32

Dear Madam or Sir:

Mesirow Financial Investment Management, Inc. (“Mesirow”) thanks the Department of
Labor (the “Department”) for the thought, time and effort put into the initiative (the “Proposal”’)
to update and redefine fiduciary investment advice under section 3(21) of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”).

Mesirow is the pioneer of outsourced fiduciary services within the retirement plan
marketplace. Mesirow serves over 20,000 plan sponsors nationally and is responsible for over
$37 billion in assets under its care. The Investment Strategies group at Mesirow is an
independent, outsourced fiduciary that provides plan-level, advisory and discretionary fiduciary
services to plan sponsors and fiduciaries of defined contribution plans of all sizes.

Mesirow’s mission is centered on reducing the operational and fiduciary burden on plan
sponsors and fiduciaries, and to help plan sponsors and fiduciaries of every size better manage
their retirement plan portfolios by providing professional fiduciary services, governance,
efficiency, and value. Because Mesirow recognizes plan sponsors and fiduciaries may need
different services and fiduciary support depending on their size, resources, and specific plans,
Mesirow’s fiduciary programs can be customized to the particular needs of each plan sponsor
and fiduciary. Notably, Mesirow’s services may be provided as an integrated part of a provider's
platform or directly adopted as an “add-on” service by plan sponsors or fiduciaries.

Given Mesirow’s wide range of services that assist plan sponsors and fiduciaries in
fulfilling their fiduciary duties, Mesirow encourages the Department to promote the continued
proliferation of beneficial products and services within the vast retirement plan marketplace. To
help accomplish this goal, Mesirow suggests that any final regulations provide as follows:


© Bundled Services and the Platform Provider Carve-Out. Bundled services, such as
Mesirow’s outsourced fiduciary services, offered or provided through a
recordkeeper’s platform fall within the the carve-out set forth in the Proposal at 29
C.F.R. section 2510.3-21(b)(3) (the “Platform Provider Carve-Out”).

@ Recommendation of a Third Party Fiduciary Service. The following situations are
not “recommendations” under the the “recommendation” provision set forth in the
Proposal at 29 C.F.R. section 2510.3-2 1 (a)(1)(iv) (the “Recommendation Provision”):

o Recommendation By A Platform Provider. A recordkeeper merely making
available a third party fiduciary on its platform otherwise satisfying the
Platform Provider Carve-Out.

o Recommendation of a Third Party Fiduciary Service By a Non-Platform
Provider Service Provider. A service provider intermediary, such as an
adviser or third-party administrator, merely making a recommendation of
a third party fiduciary service when no compensation is paid to the
intermediary in connection with the recommendation.

I. Bundled Services Offered Or Provided Through A Recordkeeping Platform Should
Be Included In the Platform Provider Carve-Out

The Proposal’s Platform Provider Carve-Out provides that persons who make available
securities or other property to an employee benefit plan through a platform or other mechanism
from which a plan fiduciary may select or monitor investment alternatives is not fiduciary advice.
See 80 Fed. Reg. 21928, 21957 (Apr. 20, 2015).

While Mesirow thanks the Department for recognizing that the offering of a “platform” is
not a fiduciary act, we urge the Department to go further to protect vital services beyond a pure
“recordkeeping platform” itself that are currently made available to plan sponsors and fiduciaries
through a platform solution. Thus, Mesirow respectfully suggests that the Department expand
the Platform Provider Carve-Out to include other bundled services offered on a platform
alongside the investment options made available to plan sponsors and fiduciaries. Services such
as third party administrative services, qualified default investment managers and third party
fiduciary service providers, such as Mesirow, are often bundled within the recordkeeper’s
platform. These are all valuable services that the plan sponsors and fiduciaries may not
otherwise know are available unless offered through a platform itself.

Consider the example of the American Recordkeeping Company that specializes in
servicing the retirement plan market for ERISA governed retirement plans with less than 500
participants. American Recordkeeping Company offers its plan sponsor clients the ability to
select from hundreds of investment options. Understanding that some clients many not have the
financial resources to prudently select and monitor investment options available on the platform
under a “prudent expert” standard, American Recordkeeping Company makes available
Mesirow’s outsourced fiduciary services to plan sponsors and fiduciaries adopting its platform.

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The American Recordkeeping Company includes a description of Mesirow’s services and allows
a plan sponsor or fiduciary to select Mesirow’s outsourced fiduciary service to help select and
monitor the investment options for the plan sponsor’s defined contribution plan.

However, Mesirow’s services may not fit within the current construction of the Platform
Provider Carve-Out. Given the pro-participant, beneficiary, and plan fiduciary nature of these
services, Mesirow suggests that the Department include them within the scope of the Platform
Provider Carve-Out in any final guidance.

Mesirow notes that this concern about the scope of the Platform Provider Carve-Out
applies to plans of all sizes — from small to large. Large plans can have similar problems and
issues that outsourced fiduciary service providers like Mesirow can alleviate. In the era of tight
corporate budgets and employee downsizing, many plan sponsors do not have the financial or
human capital to fulfill their fiduciary duties under ERISA.

Consider the example of Boston Recordkeeping Group that services the large plan market
with plans over 2,500 participants. Boston Recordkeeping Group, like the American
Recordkeeping Company described in the example above, offers its plan sponsor and fiduciary
clients the ability to select from thousands of investment options available on the Boston
Recordkeeping Group’s platform, including proprietary investment options. Boston
Recordkeeping Group understands that many of its plan sponsor and fiduciary clients are
wrestling with tight financial budgets and are unable to properly handle the investment selection
and monitoring responsibilities for their defined contribution plans in house. Thus, Boston
Recordkeeping Group includes the Mesirow outsourced fiduciary services in the platform
provided to its plan sponsor and fiduciary clients.

Services such as Mesirow’s investment option selection and monitoring solutions are
beneficial to participants and beneficiaries of defined contribution plans within a wide range of
market segments in the retirement plan industry. Mesirow’s fiduciary services offered to plans
and their participants often provide professional fiduciary services to plans that may otherwise
not have these services available to them and included as part of their fiduciary processes. If the
Department does not include bundled services within the Platform Provider Carve-Out,
recordkeepers may be less willing to include such services on their platforms (or, alternatively,
will increase the costs passed through to plan sponsors, fiduciaries, participants, and
beneficiaries), thus undermining the same fiduciary processes that the Department regularly
encourages when communicating with plan sponsors. Mesirow suggests that such an outcome is
inconsistent with the Department’s stated objectives for the Proposal.

As such, Mesirow asks that the Department encourage the use of beneficial products and
services, and include bundled services, such as outsourced fiduciary services, within the Platform
Provider Carve-Out.

I. The Department Should Clarify The “Recommendation” Portion Of The Proposed
Definition Of Investment Advice

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