challenges of each of these different markets, uniquely positioning us to assist the Department in
better understanding how the Proposal would impact plans, participants and service providers
across the board.

We appreciate your consideration of our request and look forward to offering our insight. If you
have any questions or need additional details, please contact me at 303-737-3068 (office) 303-570-
3042 (cell) or via e-mail at charlie.nelson@gwls.com.

Sincerely,

Charles P. Nelson,
President, Great-West Retirement Services


at 8515 East Orchard Road

Greenwood Village, CO 80111

7

(303) 737-3000
Great-West Address mail to: P.O. 173764
RETIREMENT SERVICES’ Denver, CO 80217-3764

February 7, 2011
Submitted Electronically — Re: Hearing on Definition of “Fiduciary”

Office of Regulations and Interpretations
Employee Benefits Security Administration
U.S. Department of Labor

200 Constitution Ave., NW

Washington, DC 20210

e-ORI@dol.gov

Ladies and Gentlemen:

Please accept our request to testify at your hearing, scheduled to begin March 1, regarding the
Department’s proposed rule (the Proposal)! redefining the term “fiduciary” with respect to the
provision of investment advice under ERISA §3(21)(A)(ii).

As background, Great-West Retirement Services® (“Great-West”), a business unit of Great-West
Life & Annuity Insurance Company, is the fourth-largest retirement plan record-keeper in the
United States.” We provide 401(k), 401(a), 403(b) and 457 retirement plan services to 24,000 plans
representing 4.4 million participant accounts and $138 billion in assets at September 30, 2010. We
offer several different investment “platforms” that include both proprietary and unaffiliated
investment products. In addition, we offer tools to our platform customers to assist their decision-
making, including Fund Performance Reviews that provide information about the performance of
platform investment options against selected criteria. Our services and products are marketed both
by employees of Great-West and also by independent broker-dealers, Registered Investment
Advisors, insurance agents and other financial advisers.

Our extensive experience in assisting retirement plan fiduciaries and participants informs our
analysis of the Proposal, allowing us to provide the Department with a valuable, real life
perspective on what plan fiduciaries and participants want and expect from service providers, and
how potential changes in the fiduciary status of these relationships would impact plans and
participants. Therefore, per your request, we’ve specified the four issues we propose to address,
provided an outline of their main points and indicated the time allocated to each issue.

We recognize that the available time for testimony at this hearing will be quite limited, and we are
happy to work with you to accommodate our testimony on any one or all of these issues, including
participating in a panel.

1 75 Fed. Reg. 65263 (Oct. 22, 2010)

2 Based on total participant accounts at year-end 2009, as ranked by Plan Sponsor magazine in June 2010.


I Clarification of Platform Exception (3 minutes).

Our testimony would discuss our support for the Department’s decision to include a exception for
information provided in the context of investment platform operation, and explain the need for
clarification of the following issues:

© Elimination or Clarification of “Individualized Needs” Exclusion — The exception as proposed
is available only for making available investment platforms “without regard to the
individualized needs” of the plan. Our testimony would explain why we believe this language
does not achieve the Department’s goals and should be eliminated or modified. We do not
believe that a service-provider can offer a platform that does not take into account the
individualized needs of the plan in some manner, from responding to the plan’s specific
questions about design, operation and investments to discussing which platform best suits the
plan’s needs. Some of Great-West’s platforms offer extensive customization options for plans,
and other platforms offer fewer options, all of which are intended to provide to plan fiduciaries
the level of services and features they deem most appropriate for their individual plans.
Offering products, services and information that take into account the plans’ needs should not
subject record-keepers and other platform operators to fiduciary liability for providing
investment advice.

¢ Diagnostic Tools and “General Financial Information” — Our testimony would explain why
the Department should clarify that diagnostic tools providing comparisons between options
based on objective data is not advice. Providing plan fiduciaries with objective information
regarding common fund metrics, such as comparative past performance or fee data, should not
be fiduciary advice. Unless it is clear that such tools are a form of “general financial
information,” platform providers likely will reduce or eliminate the tools they offer to the
detriment of plans and participants.

¢ Mapping and Conversion Assistance is not Investment Advice ~ Plans often ask questions and
request assistance from platform operators when changing platforms using mapping or
conversion. Our testimony would address why offering assistance and insight to plan clients
who retain the sole authority to make all fiduciary decisions associated with mapping and
conversion should not make the platform operator a fiduciary investment advisor, and describe
the additional cost and difficulty plans will face without such assistance.

¢ Investment Option Removal and Replacement is not Investment Advice — Platform operators
must be able to remove and replace investment options without becoming fiduciary investment
advisors. Our testimony would explain why the Department should clarify that removing and
replacing funds using a process consistent with the Aetna Advisory Opinion 97-16A should not
be fiduciary advice.

II Expansion and Clarification of Valuation Exception (3 minutes)

Our testimony would discuss our support for the Department’s decision to include a exception for
certain types of valuations, and explain the need for expanding the exception as follows:

© General Exception for Fair Value Pricing — Our testimony would explain why the Department
should clarify that the definition of fiduciary valuation services does not reach to fair value
pricing effected in connection with an underlying open-end registered investment company


(mutual funds) or collective investment trust funds, which are designed to prevent market
timing activities in the funds.

© General Exception for Annuities and Other Insurance Products ~ Our testimony would explain
why valuations connected with Great-West’s group annuity insurance products and other
insurance investment contracts should not be fiduciary investment advice. We do not believe
the Department intended to cause insurance companies and their employees to become
fiduciaries merely because, for example, they mechanically calculate the value of an insurance
contract for the purpose of a participants’ minimum distribution requirement.

© General Exception for “Passing-Through” Valuations — Our testimony would address needed
clarification that record-keepers and other service providers are not fiduciary investment
advisers for reporting or otherwise providing to plans valuations that are merely “passed-
through,” and not actually performed by the service provider.

Ill Fiduciary Concerns of Affiliates in Bundled Service Arrangements (2 minutes)

Our testimony would explain the need to change language in the Proposal making a fiduciary
investment adviser a person whose affiliate is a fiduciary to the plan for another purpose. We urge
the Department to clarify that a record-keeper in a bundled service arrangement is not potentially a
fiduciary investment adviser because an affiliate is, for example, an ERISA §3(38) investment
manager with respect to the plan. We believe this is consistent with the Department’s position in
the Aetna Opinion 97-16A.

IV Clarification of the Sales Exception (2 minutes)

Our testimony would discuss our support for the Department’s decision to include a exception for
information provided in the context of sales, and explain the need for clarification of the following
issues:

© Exception Applies to Sales Discussions Throughout the Service Provider Relationship — Our
testimony would explain that the rule should clearly state that sales activity is excepted
regardless of when during the service provider relationship it occurs. Information related to
sales is exchanged on an ongoing basis with the plan throughout the course of the service
provider relationship, as the plan makes changes to its investments months or even years after
the relationship starts.

© Exception Should Not Use Term “Adverse” — Our testimony would address why the sales
exception must be redrafted because the term “adverse” cannot properly be used to describe the
plan and service provider relationship. Financial service providers must take into account the
needs of their clients, consistent with their legal obligations under the prevailing duty of care,
such as the securities law standards of suitability or fiduciary obligation. As a result of these
legal duties, a service provider cannot properly be considered “adverse” to his or her client.
Having a “financial interest” would be language more consistent with the legal duties of
advisers.

As noted earlier, our broad expertise enables us to provide a unique “voice” that distinguishes
Great-West Retirement Services from other industry organizations. We have extensive experience
with a broad range of plans and products, including 401(k), 401(a), 403(b), 457, and all plan sizes.
We are familiar with the legal issues, plan sponsor concerns and participant communication