The Honorable Thomas E. Perez 

Secretary 

U.S. Department of Labor 

2DO Constitution A venue, N. W. 

Washington, D.C. 202 ! 0 

Dear Secretary Perez: 

August 4, 2015 

We write today in regards to the U.S. Department of Labor's (DOL) recently proposed regulation 

that would change the definition of fiduciary investment advice under the Employee Retirement 

Income Security Act of 1974 (ERlSA). We appreciate the thinking that went the Department's 

best interest standard framework for personalized investment advice to retirement savers. We 

also appreciate tl1e time and effort that has gone into seeking a balance between protecting 

consumers and making sure they receive the necessary assistance in navigating important 

investment decisions. We know that individuals achieve better outcomes in preparing for a 

financially secure retirement when they receive education and guidance from financial advisers 

and service providers of retirement products such as individual retirement accounts (fRAs) and 

workplace savings vehicles such as 40J(k) plans. The current proposal, however, would do 

significant harm to individuals saving for retirement- particularly lower and middle income 

Individuals - and small businesses that maintain, or want to adopt, retirement plans. 

As with the DoL 's original proposal in 2010, this rule would greatly expand the types of 

interactions with retirement savers that would be treated as fiduciary investment advice. Unlike 

the 20 l 0 proposal, the DoL has helpfully included new exemptions from ERISA 's prohibited 

lransaction rules so that varfous service models aimed at helping different types of individuals 

are not banned. Unforttmately, we have heard from numerous constituents in our states that the 

proposed ex.emptions are extremely limited in scope and largely unworkable, effectively 

prohibiting substantial assistance that is in the best interest or retirement savers across all income 

levels. As a result, while we understand that the financial services firms i11 our states 'support a 

best interest standard, the proposed rule would have the impact of prohibiting these firms from 

providing retirement savers with the advice and guidance they need and want - even if that 

guidance is in the saver's best interest. Consequently, we request that, prior to the publication of 

a final rule, the Administration work with representatives of the small business community and 

members of the financial services industry to produce a workable rule that protects savers yet 

does not hamstring or prevent the industry from using long established service models to help 

individuals plan and save for retirement. 
Without significant changes to the proposed rule) we are concerned that some basic needs of 

retirement savers will not be met: 

• The rule restricts critical investment educatio11 and guidance. Under the proposal, 

providing examples of specific investment funds in connection with a model asset 

allocation would now constitute fiduciary investment advice. Without identifying 

specific investment funds, the asset allocation materials wtll be neither effective nor 

uscfu I for most savers. 

• The rule materially reduces assistance to small businesses. The '·principles-based" 

exemption excludes plan sponsors of small participant-directed plans. Essentially, this 

means that small businesses cannot look either to financial advisers or retirement service 

providers for assistance in structuring their plan's fond line-ups. This will both stifle 

small plan formation and result in many business owners terminating their plans, 

hindering many of our constituents and employees of smal I businesses from saving for'! 

reliable future. In addition, if small businesses do not get the help they need to offer 

retirement pla11s, they wi 11 be less competitive wlth larger businesses, resulting in less 

innovation and jobs in our states. 

• The rule limits rollover and distribution assistance. The extremely broad nature of the 

definition of investment advice would curtail not only investment assistance but critically 

important discussions and communications about plan distributions and rollovers. We 

have seen data that savers who receive personalized assistance from a financial 

professional are three times less likely to cash out of a retirement plan when they leave a 

job. The proposed rule could have the effecl of harming investors by increasing the 

likelihood that they take premature distributions from their retirement savings, subjecting 

them to severe penalties and taxes. 

Our number one concern as governors is that any federal rulemaking on the subject of retirement 

savings not negatively impact !ow- and moderate-income citizens looking to save for their 

futures or small businesses. Better outcomes in private retirement savings can lessen the burden 

on our publicly funded state programs for those who cannot meet their own needs in retirement. 

It is critical that the final rule allows financial services providers in our states to continue 

providing the much needed investment education and guidance to savers and small businesses. 

We thank you for your consideration of our concerns and recommendations, and we look 

forward to staying apprised of further developments. 

GOVERNOR CHARLIE BAKER 

Commonwealth of Massachusetls 

Respectfully, 

GOVERNOR MAGGIE HASSAN 

State of New Hampshire