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Hefren-Tillotson, Inc.

METICULOUS WEALTH MANAGEMENT SINCE 1948

July 10, 2015

The Honorable Patrick Toomey
United States Senate

248 Russell Senate Office Building
Washington, D.C. 20510

Dear Senator Toomey:

The undersigned associations, chambers of commerce, organizations, and small
businesses are writing to express our serious concerns regarding the U.S. Department of
Labor's ("DOL") proposed rulemaking regarding the Conflict of Interest rule. If finalized
in its current form, the proposed rulemaking will disproportionately disadvantage small
businesses and stifle retirement savings for millions of employees, by placing additional
burdens on America's leading job creators, small businesses.

This will substantially reduce retirement savings for many Americans.

On April 20, 2015, the DOL proposed a rulemaking that expands what is
considered fiduciary investment advice under the Employee Retirement Income
Security Act ("ERISA"), negatively impacting small business retirement plans.

Through SEP IRAs and SIMPLE IRAs, small business owners and their employees have
accumulated approximately $472 billion of retirement savings covering more than 9
million U.S. households.' The DOL proposal threatens the continued success of these
plans and the ability of small businesses to provide retirement security at a time when
millions of Americans have reached or are approaching retirement age.

First, the proposal makes it harder to provide retirement plans to smal] businesses.
The broadened definition of investment advice includes "sales" communications, certain
educational materials and other situations where no intention to provide individualized
fiduciary advice has been expected. However, the proposal carves out large plan advisors
from this definition. If a plan has 100 or more participants, or $100 million or more in
plan assets, the advisor to that large plan does not have to be a fiduciary, while an advisor to a
small plan does. Because an advisor to a small plan is not carved out of the rule, the advisor who

* See (nvesiment Company [nstitute, “How Many Households Own IRAs," based on ycar-end 2012 data, available at
hutp:/Avww.ici.org/faqs/fagy faqs_iras.

Hefren-Tilotson, Inc. is a member of FINRA and SIPC

308 Seventh Avenve + Pittsburgh, PA 15222 » Ph: 412.434.0990 + Fx: 412.261.4348


is trying to market retirement saving options to a small plan is considered to be providing
investment advice and must determine how to comply with the rule. Advisors to large plans
are not burdened with these additional hurdles. Due to these additional burdens,
advisors to small plans are likely to incur additional costs, which will be passed on to the
plan. Further, some advisors to small plans may be incentivized to no longer offer their
services to small plans if they determine that the small-scale of such plans means the
expense and risk of changing business models and fee structures is not justified.

Second, because advisors to small businesses are not carved out of the investment
advice definition, they must either change their fee arrangements or qualify for a special
rule called an “exemption” in order to provide services on the same terms as before.
However, the new exemption proposed by the DOL may not apply to small business plans.
It does apply to individual owners of IRAs, but it is not clear whether this exemption is
available for SEP and SIMPLE IRAs while they are being offered by the employer. Even if
the new exemption—called the "Best Interest Contract Exemption""—does apply, it would
itself substantially increase costs for advisors due to its many conditions and requirements.

More complex regulations mean more hurdles and compliance costs, and a
greater likelihood of lawsuits. Main Street advisors will have to review how they do
business, and likely will decrease services, increase costs, or both. Under the proposed
rule, smal} business SEP IRA and SIMPLE IRA arrangements will become more
expensive to serve, meaning that smal] businesses will ultimately lose access to their
advisors and disproportionately bear the costs of excessive regulation. Consequently, the
DOL's proposed regulations risk hurting the very small businesses and workers they are
intended to protect.

Sincerely,
Ks dese
Kim Tillotson Fleming

CEO and Chief Executive Officer
Hefren-Tillotson, Inc.

cc: The Honorable Thomas Perez, Secretary of Labor
Mr. Jeff Zients, Director, National Economic Council

Hefren-Tillotson, Inc.


is trying to market retirement saving options to a small plan is considered to be providing
investment advice and must determine how to comply with the rule, Advisors to large plans
are not burdened with these additional hurdles. Due to these additional burdens,
advisors to smal! plans are likely to incur additional costs, which will be passed on to the
plan. Further, some advisors to small plans may be incentivized to no longer offer their
services to small plans if they determine that the small-scale of such plans means the
expense and risk of changing business models and fee structures is not justified.

Second, because advisors to smal! businesses are not carved out of the investment
advice definition, they must either change their fee arrangements or qualify for a special
rule called an "excmption" in order to provide services on the.same terms as before.
However, the new exemption proposed by the DOL may not apply to small business plans.
It does apply to individual owners of IRAs, but it is not clear whether this exemption is
available for SEP and SIMPLE IRAs while they are being offered by the employer. Even if
the new exemption—called the "Best Interest Contract Exemption" —does apply, it would
itself substantially increase costs for advisors due to its many conditions and requirements.

More complex regulations mean more hurdles and compliance costs, and a
greater likelihood of lawsuits. Main Street advisors will have to review how they do
business, and likely will decrease services, increase costs, or both. Under the proposed
rule, smal! business SEP IRA and SIMPLE IRA arrangements will become more
expensive to serve, meaning that smali businesses will ultimately lose access to thcir
advisors and disproportionately bear the costs of excessive regulation. Consequently, the
DOL 's proposed regulations risk hurting the very small businesses and workers they are
intended to protect.

Sincerely,
Kim Tillotson Fleming

CEO and Chief Executive Officer
Hefren-Tillotson, Inc.

ce: The Honorable Thomas Pcrez, Secretary of Labor
Mr. Jeff Zients, Director, National Economic Council

Hefren-Tillotson, Inc.


IY

Hefren-Tillotson, Inc.

METICULOUS WEALTH MANAGEMENT SINCE 1948

July 10, 2015

The Honorable Robert P. Casey
United States Senate

393 Russell Senate Office Building
Washington, D.C. 20510

Dear Senator Casey:

The undersigned associations, chambers of commerce, organizations, and small
businesses are writing to express our serious concems regarding the U.S. Department of
Labor's ("DOL") proposed rulemaking regarding the Conflict of Interest rule. If finalized
in its current form, the proposed rulemaking will disproportionately disadvantage small
businesses and stifle retirement savings for millions of employees, by placing additional
burdens on America’s leading job creators, small businesses.

This will substantially reduce retirement savings for many Americans.

On April 20, 2015, the DOL proposed a rulemaking that expands what is
considered fiduciary investment advice under the Employee Retirement Income
Security Act ("ERISA"), negatively impacting small business retirement plans.

Through SEP IRAs and SIMPLE [RAs, small business owners and their employees have
accumulated approximately $472 billion of retirement savings covering more than 9
million U.S. households.' The DOL proposal threatens the continued success of these
plans and the ability of small businesses to provide retirement security at a time when
millions of Americans have reached or are approaching retirement age.

First, the proposal makes it harder to provide retirement plans to smal! businesses.
The broadened definition of investment advice includes "sales" communications, certain
educational materials and other-situations where no intention to provide individualized
fiduciary advice has been expected. However, the proposal carves out large plan advisors
from this definition If a plan has 100 or more participants, or $100 million or more in
plan assets, the advisor to that large plan does not have to be a fiduciary, while an advisor to a
smalJ plan does. Because an advisor to a small plan is not carved out of the rule, the advisor who

"See Invesument Company Institute, “How Many deamnineied Own IRAs." based on year-cnd 2012 data, available ot
utpuhww. ici.org/faqs/faq/faqs_iras.

Hefren-TWloaon, Inc. 5s @ member of FINRA and SIPC

308 Seventh Avenue + Pittsburgh, PA 15222 + Ph: 412.434.0990 + Fx: 412.261.4348


is trying to market retirement saving options to a small plan is considered to be providing
investment advice and must determine how to comply with the rule, Advisors to large plans
are not burdened with these additional hurdles. Due to these additional burdens,
advisors to small plans are likely to incur additional costs, which will be passed on to the
plan. Further, some advisors to small plans may be incentivized to no longer offer their
services to small plans if they determine that the small-scale of such plans means the
expense and risk of changing business models and fee structures is not justified.

Second, because advisors to small businesses are not carved out of the investment
advice definition, they must either change their fee arrangements or qualify for a special
tule called an “exemption” in order to provide services on the same terms as before.
However, the new exemption proposed by the DOL may not apply to small business plans.
It does apply to individual owners of IRAs, but it is not clear whether this exemption is
available for SEP and SIMPLE IRAs while they are being offered by the employer. Even if
the new exemption—called the "Best Interest Contract Exemption" —does apply, it would
itself substantially increase costs for advisors due to its many conditions and requirements.

More complex regulations mean more hurdles and compliance costs, and a
greater likelihood of lawsuits. Main Street advisors wil! have lo review how they do
business, and likely will decrease services, increase costs, or both. Under the proposed
tule, small business SEP IRA and SIMPLE IRA arrangements will become more
expensive to Serve, meaning that smal! businesses will ultimately lose access to their
advisors and disproportionately bear the costs of excessive regulation. Consequently, the
DOL's proposed regulations risk hurting the very small businesses and workers they are
intended to protect.

Sincerely,
Kim Tillotson Fleming

CEO and Chief Executive Officer
Hefren-Tillotson, Inc.

cc: The Honorable Thomas Perez, Secretary of Labor
Mr. Jeff Zients, Director, National Economic Council

Hefren-Tillotson, Inc.


My

Hefren-Tillotson, Inc.

METICULOUS WEALTH MANAGEMENT SINCE 1948

July 10, 2015

The Honorable Michael F. Doyle
United States House of Representatives
239 Cannon HOB

Washington, D.C. 20515

Dear Congressmen Doyle:

The undersigned associations, chambers of commerce, organizations, and smal]
businesses are writing to express our serious concerns regarding the U.S. Department of
Labor's ("DOL") proposed rulemaking regarding the Conflict of Interest rule. If finalized
in its current form, the proposed rulemaking will disproportionately disadvantage small
businesses and stifle retirement savings for millions of employees, by placing additional
burdens on America’s leading job creators, small businesses.

This will substantially reduce retirement savings for.many Americans.

On April 20, 2015, the DOL proposed a rulemaking that expands what is
considered fiduciary investment advice under the Employee Retirement Income
Security Act ("ERISA"), negatively impacting small business retirement plans,

Through SEP IRAs and SIMPLE IRAs, small business owners and their employees have
accumulated approximately $472 billion of retirement savings covering more than 9
million U.S. households.' The DOL proposal threatens the continued success of these
plans and the ability of small businesses to provide retirement security at a time when
millions of Americans have reached or are approaching retirement age.

First, the proposal makes it harder to provide retirement plans to small businesses.
The broadened definition of investment advice includes “sales" communications, certain
educational materials and other situations where no intention to provide individualized
fiduciary advice has been expected. However, the proposal carves out large plan advisors
from this definition. [f a plan has 100 or more participants, or $100 million or more in
plan assets, the advisor to that large plan does not have to be a fiduciary, while an advisor to a
small plan does. Because an advisor to a small plan is not carved out of the rule, the advisor who

! See investment Company Institute, “How Many Households Own IRAs," based on year-end 2012 data, available ot
hupy/\www.ici.org/Faqs/faq/faqs_iras.

Hefren-Tillotson, Inc. is a member of FUNRA and SIPC

308 Seventh Avenue « Pittsburgh, PA 15222 + Ph: 412.434.0990 « Fx: 412.261.4348