Message To: e-ORI@dol.gov and e-OED@dol.gov

From: Fil Williams

Subject: RIN 1210-AB32; Notice of Proposed Rulemaking (NPRM) –

Definition of the Term “Fiduciary”; Conflicts of Interest Rule –

Retirement Investment Advice; ZRIN: 1210-ZA25; Notice of 

Proposed Best Interest Contract Exemption (BICE) and related class 

exemption proposals (D-11712, D-11713, et al.) 

Interested persons are advised that I was a long-time employee of the U.S. Department of 

Labor (DOL), who served almost my entire career as an employee (i.e., pension law 

specialist) with the Employee Benefits Security Administration (EBSA). I retired in 

January 2013, after completing over thirty-three (33) years of Federal service with DOL. 

Thus, my interest in this matter is currently as a private citizen, is purely academic and 

does not represent the interests of any private party, private sector firm or organization.

I have read the NPRM and related class exemption proposals. I’m familiar with their 

subject matter and history. In this regard, I worked for many years in EBSA’s Office of 

Regulations and Interpretations (ORI) and Office of Exemption Determinations (OED). 

Specifically, in ORI, I worked on advisory opinions (AOs) and other technical guidance 

relating to prohibited transaction (PT) and exemption issues under ERISA. In OED, I 

worked on many individual and class exemptions (PTEs) dealing with such PT issues, 

including matters concerning the class PTEs that DOL is proposing to amend in 

connection with the NPRM.

During my years in ORI (i.e., from April 2004 to December 2012), I was often required 

to speak to outside groups and organizations, as well as other Federal agencies (e.g., 

FDIC), about current PT and other fiduciary issues under ERISA, including various AOs, 

regulations and regulatory projects dealing with the same PT issues being considered in 

the NPRM and related class PTEs. 

My past experience as a DOL employee in EBSA, both in ORI and OED, has allowed me 

to accumulate a unique perspective on the subject matter at hand, which hopefully may

add some credibility to comments that I wish to make as a private citizen. These 

comments are meant to encourage a final conclusion of this important matter. 

Comments:

1. While the general public’s overall knowledge of PTs and PTEs under ERISA, and 

the significance they have to their retirement income security and performance, is 

often rather low, their common sense perspective and understanding of fiduciary 

self-dealing, conflicts of interest, and third-party compensation is high enough for 

them to understand pertinent issues that impact their retirement security when 

proper disclosures are made to them in a clear and concise manner.
2. Disclosures made to participants of ERISA-covered pension plans (e.g., 401k 

plans or other similar individual account plans), as well as disclosures made to 

individuals who establish and maintain individual retirement accounts (IRAs), are 

often complex, voluminous, and confusing to the average person. This concern 

may be particularly problematic for younger workers who need to start saving and 

investing more effectively for their retirement. Thus, disclosures made to them

should adequately highlight information about when fiduciary self-dealing, 

conflicts of interests, and third-party compensation are present and briefly explain 

why they are relevant.

3. Service-providers to pension plans, including fiduciaries who have or obtain 

“fiduciary” status by providing “investment advice for a fee” pursuant to the 

current DOL regulation at 29 CFR § 2510.3-21(c), often do not present or explain 

pertinent information to plan participants in a manner that allows for them to have

a clear understanding of fiduciary conflict issues. 

Lack of proper knowledge and /or understanding about conflicts often results in

suspicions that inhibit participants from developing suitable and sustainable 

investment strategies or trust in the retirement savings system. Such suspicions

can lead to irrational behaviors that produce negative results, such as: 

(i) Lack of steady funding of a retirement plan (even when consistent

savings are possible);

(ii) Unnecessary leakage from retirement asset accumulations, and /or

(iii) Inappropriate long-term investment strategies (e.g., an overly 

conservative approach that fails to adhere to professional 

investment advice and proper risk management strategies). 

The crisis of confidence that results from arrangements where participants 

lack key information, or a clear understanding of available information, is 

avoidable with a combination of proper disclosure and professional 

“fiduciary” investment advice. 

4. While service and investment arrangements with lower fees and/or fewer conflicts 

of interest are important options for participants and appropriate plan fiduciaries 

to understand, contractual obligations that bind parties to particular agreements

where such options are present can and should be made more certain. Such 

certainty would be an improvement over current practices for “fiduciary” advice 

that occur under the existing DOL regulation at 29 CFR § 2510.3-21(c). Clear 

and concise disclosure of salient terms and conditions in fiduciary services

agreements should be considered imperative to their success. The certainty of an 

investment adviser’s “fiduciary” status to a plan and/or participant is vital to that 

success.

 

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Based on the concerns noted above, finalization of the NPRM and related class 

exemptions should ensure that operation of any service / investment agreements for 

“fiduciary” advice deemed “impartial” and/or “in the best interest” of client plans and 

participants require clear and concise disclosure to responsible fiduciaries to enable 

effective understanding and monitoring of pertinent conflicts. Conflict disclosures that 

are prominently displayed, along with guides or other disclosure tools that highlight 

fiduciary conflicts, should enhance the understanding of salient contract terms by 

responsible plan fiduciaries and affected participants.

In sum, the status of an investment adviser as a “fiduciary” under ERISA can be made 

more certain to affected ERISA-covered plans and participants, as well as to IRAs and 

IRA owners, through finalization of the NPRM in some version of its present form. 

Finalization of amendments to existing class PTEs, as proposed (with any adjustments 

deemed essential by DOL), should also allow for greater certainty in contractual 

compliance, monitoring and avoidance of PT liability by responsible plan fiduciaries. 

Appropriate class PTEs for arrangements involving non-abusive fiduciary self-dealing, 

conflicts, and third-party compensation should help facilitate professional “fiduciary” 

investment advice deemed in the best interests of affected pension plans and their

participants, including IRAs and their owners. 

The current DOL proposals seek to address these important concerns and are a valuable 

step toward improving the existing “fiduciary” investment advice framework under DOL 

regulations at 29 CFR § 2510.3-21(c) that have become outdated by marketplace 

developments since the 1970s. Continued resistance to these improvements by certain

affected stakeholders in the financial services industry will undermine the public’s 

perception of the industry’s overall credibility in pursuing meaningful reform and

diminish the industry’s ability to maintain the public’s trust. Meanwhile, industry

participants’ failure to adopt best practice measures consistent with any well-intentioned 

regulatory reforms proposed by DOL does not serve the important role that the financial 

services industry plays in the success of the retirement savings system, as regulated by 

ERISA. Finally, financial services firms that make meaning progress toward addressing 

“fiduciary” conflict concerns are to be commended. Positive public perceptions of such 

firms, with the renewed confidence they bring to affected plans and participants, should

help reward them with more business and shape future industry developments. 

Best wishes to all DOL personnel involved in the finalization of this regulatory project, 

as well to all of my former DOL colleagues, as they complete this important work. 

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