FIDUCIARY COUNSELORS INC.

700 12th Street NW • Suite 700 • Washington, DC 20005 • phone (202) 558-5130 • fax (202) 558-5140

www.fiduciarycounselors.com

July 20, 2015

Office of Regulations and Interpretations

Employee Benefits Security Administration

Room N-5655

U.S Department of Labor

200 Constitution Avenue NW

Washington, DC 20210

Submitted to: e-ORI@dol.gov

Re: Proposed Investment Advice Regulation

Ladies and Gentlemen:

Fiduciary Counselors Inc. (“Fiduciary Counselors”) welcomes the opportunity to comment on 

the Department of Labor’s (the “Department”) proposed regulation relating to the definition of a 

fiduciary under 29 CFR 2510.3-21. The proposed regulation defines who is a fiduciary of an 

employee benefit plan as a result of giving investment advice to a plan or its participants or 

beneficiaries. The proposal describes additional circumstances under which the advice 

relationship would be subject to ERISA’s fiduciary responsibility provisions. 

Fiduciary Counselors is an independent company whose primary focus is providing independent 

fiduciary services. We do not provide portfolio management or brokerage services and, 

consequently, are not presented with any potential conflicts of interest when providing our 

independent fiduciary services. 

Fiduciary Counselors is an investment adviser registered with the Securities and Exchange 

Commission (“SEC”) under the Investment Advisers Act of 1940. Prior to its incorporation in 

1999, Fiduciary Counselors operated as a business unit within Actuarial Sciences Associates.

As the proposed rule is currently drafted, an investment advice fiduciary is defined in section 

2510.3-21(a), which lists the categories of advice which would constitute “investment advice.” 

Section 2510.3-21(b) contains a number of specific carve-outs from the scope of the general 

definition. Specifically, section 2510.3-21(b)(5) contains a carve-out for persons providing 

appraisals, fairness opinions or statements of value. Under that section, there are specific carveouts for ESOPs, investment funds holding the assets of more than one unaffiliated plan, and 

valuations for purposes of compliance with federal and state reporting or disclosure provisions. 
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Fiduciary Counselors has significant concerns about the Department’s decision to include 

appraisals provided in connection with a specific transaction involving the acquisition, 

disposition, or exchange of securities or other property by a plan or IRA under the definition of 

investment advice. Although the proposal contains a carve-out for appraisals and fairness 

opinions provided to ESOPs, investment funds and to plans and IRAs solely for purposes of 

compliance with various reporting and disclosure schemes, Fiduciary Counselors believes that 

the scope of the carve-out should be expanded to include other situations where the potential for 

conflicts of interest or self-dealing is remote, such as persons providing appraisals and fairness 

opinions to an independent fiduciary. Absent such an additional carve-out, we believe plans will 

be significantly harmed as discussed below.

As an independent fiduciary (“IF”), Fiduciary Counselors routinely engages appraisers and 

valuation firms to provide appraisals and fairness opinions to assist us in our engagements on 

behalf of our client plans. We seek out independent firms that we believe provide the most 

expertise in the associated subject matter. We have the sole fiduciary responsibility to engage 

such firms and the engagement letter is typically between the valuation firm and Fiduciary 

Counselors, as IF to the plan. The valuation firm provides its analysis and report directly to us. 

We analyze the materials provided, review key assumptions, and hold discussions with the firm 

to fully understand their analysis and conclusions. We incorporate their materials along with 

other data, analysis, and information we obtain in order to determine the appropriate value for 

the asset, as part of our fiduciary responsibilities. We never simply accept a valuation report at 

face value. 

For example, we may be engaged by a client desiring to contribute employer-owned real 

property to its defined benefit plan as part of a prohibited transaction exemption (“PTE”) or 

pursuant to the statutory exemption under section 408(e) of ERSIA. Fiduciary Counselors would 

engage the services of a reputable real estate appraisal firm to determine the fair market value of 

the property. We would review and analyze the appraiser’s report, speak with the firm to probe 

its assumptions, etc. 

As currently drafted in the proposed regulation, the real estate appraiser in our example would be 

considered a fiduciary. We have been informally advised by such service providers that, if their 

valuation services to plans resulted in fiduciary status under ERISA, they may no longer offer 

their services to IFs or would otherwise significantly increase their fees to reflect the increased 

risk of being a fiduciary. As a result, we are especially concerned that we would no longer be 

able to utilize the services of some of the best and most experienced appraisal and valuation 

firms, which would result in potential harm to the plan. Alternatively, the costs associated with 

securing an administrative exemption or complying with a statutory exemption may increase 

significantly, thereby potentially depriving plans of otherwise beneficial transactions.

Accordingly, we strongly recommend that the Department expand the carve-outs in section 

2510.3-21(b)(5) to exclude appraisal and valuation firms selected by IFs in connection with its 

fiduciary responsibilities to the plan. The IF is ultimately responsible under ERISA for its actions 

taken on behalf of the plan, including the valuation of the property involved in the transaction.
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This will ensure that IFs are able to provide plans and plan participants and beneficiaries with the 

best possible services at the lowest prices.

Please contact me at (202) 558-5135 if you would like to discuss further.

Sincerely,

Laura S. Rosenberg, CFA, CIRA, CDBV

Senior Vice President

cc: Ivan Strasfeld, Senior Advisor