1001 PENNSYLVANIA AVE., NW 

SUITE 500 SOUTH

WASHINGTON, DC 20004 

TEL 202-289-4322 

FAX 202-628-2507 

E-Mail rich@fsround.org 

www.fsround.org

RICHARD M. WHITING 

EXECUTIVE DIRECTOR 

AND GENERAL COUNSEL 

May 5, 2010 

 Impacting Policy. Impacting People. 

Office of Regulations and Interpretations 

Employee Benefits Security Administration 

Attn: 2010 Investment Advice Proposed Rule 

US Department of Labor 

200 Constitution Avenue, NW 

Washington DC 20210 

RE: Dept. of Labor’s Proposed Regulation on Investment Advice – Participants and 

Beneficiaries (RIN 1210-AB35) 

Dear Sir or Madam: 

The Financial Services Roundtable1

 (“Roundtable”) submits this letter in response to the 

Department of Labor’s (“DOL”) proposed regulation on investment advice. The Roundtable 

supports the Department’s intent to enhance the amount of clear and concise disclosures made 

by plan advisors. However, the Roundtable is concerned that the broad application of the 

proposal may cause unintended consequences. The Roundtable urges the DOL to create a 

workable plan for disclosure will positively impact the promotion and expansion of retirement 

plans. Our concerns are outlined below. 

Historical Performance Provides Greater Context 

Paragraph (b)(4)(i)(E)(3) of the proposed rule prohibits developers of computer models from 

providing investment recommendations within an asset class on a basis that cannot 

“confidently” be expected to persist in the future. The proposed rule assumes that plan 

participants do not benefit from knowing how a particular asset has performed over time. 

Therefore, while a computer model is free to include fees and expenses in its analysis, it may not 

consider historical performance. The Roundtable disagrees with the assertion that historical 

performance is not an “appropriate criteria for asset allocation” because it is “less likely” to 

persist into the future. The consequence of this proposed prohibition is that less information 

ultimately would be available to plan participants. The proposal also discounts assets that have 

demonstrated a high-level rate of return or displayed long-term consistency. 

The Roundtable believes that historical performance is a critical factor that plan participants 

need to know when they are considering the range of available investment options. Given the 

 

1 The Financial Services Roundtable represents 100 of the largest integrated financial services companies providing banking, 

insurance, and investment products and services to the American consumer. Member companies participate through the 

Chief Executive Officer and other senior executives nominated by the CEO. Roundtable member companies provide fuel for 

America's economic engine, accounting directly for $74.7 trillion in managed assets, $1.1 trillion in revenue, and 2.3 million 

jobs. 
 

important contextual role that historical performance data plays, the information should be 

provided to investors and included in any program providing investment guidance to plan 

participants. Therefore, the Roundtable respectfully recommends that the Department amend 

the proposed rule to include historical performance as necessary component to the investment 

advice puzzle. 

Expanded Definition of Fiduciary

The proposed rule includes an expanded definition of “fiduciary adviser” (see section 

2550.408g-8c(2)(i)). This broad definition includes banks, insurance companies, broker-dealers, 

marketing personnel and computer designers. Of note, subsection 8c(2)(ii) of the proposed rule 

provides that “any person who develops the computer model, or markets the computer model or 

investment advice program” is considered a fiduciary adviser. The Roundtable believes that this 

proposed definition of a fiduciary adviser is overly broad. 

We are concerned that the proposal is an effort to impose a uniform duty of care in the industry 

and that imposing fiduciary liability on indirect persons (software developers and marketers) 

imposes additional and expensive burdens on financial firms. This would lead to significant 

unintended consequences, such as limiting investor options. Further, the imposition of a 

fiduciary relationship would decrease the number of software developers willing to create the 

investment-advisor software absent significant additional compensation from advisors. The 

finalization of this provision would increase the cost of service for plan providers and ultimately 

consumers. It may also impact an investment advisor’s decision-making processes regarding 

whether they should invest in developing a computer model at all. 

The Roundtable respectfully recommends that the Department withdraw the proposed definition 

of “fiduciary adviser” and develop a more accurate and simplified definition of fiduciary that 

does not encapsulate a large population of individuals that do not directly provide investment 

advice to the plan participant. In the alternative, the definition should include an exception for 

computer developers and marketers who were hired as contractors by financial firms and have 

no contact with plan participants for the purposes of providing investment advice. 

Guidance for Computer Models and Annuity Investment Options 

The two methods of providing investment advice to covered plan-participants involve computer 

models that consider the plan’s investment options when it provides investment advice. The 

first approach uses software developed by a qualified, independent third-party developer (known 

as the “SunAmerica Opinion” model). The other program is derived from an exemption in the 

Pension Protection Act of 2006 (the “PPA” model). In general, a PPA computer model must 

take into account all of a plan’s investment options when it provides investment advice to 

participants. However, it does not appear that a SunAmerica model is required to consider every 

investment option offered by the plan when the SunAmerica model gives advice. 

The proposed rule would allow a PPA computer model to disregard a deferred annuity 

investment option that would otherwise be available under the plan. Presumably, a SunAmerica 
 

program could also disregard deferred annuity options, but the proposed rule is unclear about 

this. 

The Roundtable respectfully requests additional clarification and guidance from the Department 

regarding the apparent operational differences between the two models. We also recommend 

that the rule require at least one of the computer models to consider available deferred annuities 

when it provides investment advice. 

Conclusion

In closing, the Roundtable supports the DOL’s overall intent to enhance disclosures for plan 

sponsors. However, we are concerned about the unintended consequences discussed above that 

may occur due to the broad application of this proposal. Appropriately addressing such complex 

issues as longevity, market risk, and health care costs in retirement, will require a constantly 

evolving set of solutions. Greater regulatory flexibility and innovative public policies that foster 

the free exchange of information regarding retirement options available to plan participants will 

permit the introduction of products responsive to the retirement needs of the American people. 

Thank you again for the opportunity to share our views with you on this subject. If you have any 

questions, please feel free to contact Brian Tate, or me at 202-289-4322. 

Sincerely, 

Richard Whiting 

Executive Director and General Counsel