11609 Greenlane Drive
Potomac MD 20854
September 13, 2015

Office of Regulations and Interpretations
Employee Benefits Security Administration
Attn: Conflict of Interest Rule, Room N-5655
U.S. Department of Labor

200 Constitution Avenue NW

Washington, DC 20210

Re: RIN 1210-AB32, Proposed Department of Labor Rule on Definition of the Term
“Fiduciary”; Conflict of Interest Rule — Retirement Investment Advice

To Whom It May Concern:

As a member of the National Active and Retired Federal Employees Association (NARFE), | am writing to
express support for the Department of Labor’s Conflict of Interest Rule Proposal, RIN 1210-AB32, which
proposes regulatory changes to defining who is a “fiduciary” of an employee benefit plan under the
Employee Retirement Income Security Act of 1974 (ERISA), as well as who is a “fiduciary” of a plan
(including an individual retirement account (IRA)) under section 4975 of the Internal Revenue Code of
1986, as a result of giving investment advice to a plan or its participants or beneficiaries.

| support the proposed rule to protect individuals, including federal employees and retirees, from
receiving unsound retirement investment advice. If finalized, the rule should result in better investments
and/or lower fees and, therefore, in greater returns on the hard-earned retirement savings of millions of
Americans. The proposed rule updates the definition of “fiduciary investment advice” under the
Employee Retirement Income Security Act (ERISA) to ensure individuals saving for retirement are
protected by a “best interest standard” when receiving investment advice. Under the current rule, the
best interest standard does not apply to advice given on a one-time basis, advice regarding rollovers or
any advice on investing in an IRA. Instead, such advice is often subject only to an extremely weak
“suitability” standard, which allows financial advisers to provide recommendations that serve their own
interests instead of the clients’ best interests. The adviser may receive a better commission, but the
investor may be subject to excessive costs, poor performance and even unnecessary risk.

Federal employees and retirees invested in low-fee Thrift Savings Plan (TSP) funds — the federal
government's version of a 401(k) for federal civilian employees and military personnel — currently are
not adequately protected from bad financial advice regarding their TSP holdings. Because rollovers are
not covered by the existing definition of fiduciary investment advice, financial advisers may legally
recommend that TSP account holders roll over their TSP holdings into an IRA, where the money could be
invested in mutual funds providing the same, or essentially similar, products, such as an S&P 500 index
fund, for as much as 50 times the cost. Due to economies of scale, TSP funds charge very low
administrative fees — on average, 0.029 percent — that are far cheaper than alternatives that provide the
same, or essentially similar, returns.



The lack of legal protection is having real-world implications for federal employees and retirees. In fact,
as reported by The Washington Post in August 2014, when a former federal employee (and pension
expert) went undercover to seek advice regarding his TSP holdings, eight out of nine major investment
firms told him to roll over his TSP funds into IRAs providing the same or similar investments as offered
by the TSP for a substantially higher cost. That is the very definition of bad advice. Even though it meets
a “suitability” standard, it meets the needs of the adviser only, not the investor.

While there are some legitimate reasons to roll over TSP holdings into an IRA — e.g., higher tolerance for
risk, investment in some asset types not available in the TSP funds — in most cases, federal employees
and retirees are better off leaving their money in the TSP. Yet, more than 50 percent of TSP participants
removed their funds from the TSP within a year of when they separated from service, according to the
latest report by the Federal Retirement Thrift Investment Board (FRTIB). That number is worrisome
given the low costs of TSP investments, and it speaks to the prevalence of the bad advice that federal
employees and retirees are receiving.

It's time to close the loophole in the definition of a “fiduciary” and ensure a high standard that holds
anyone who gives financial advice genuinely accountable for helping everyday Americans choose the
best retirement investments. This rule will ensure that all financial professionals who offer retirement
investment advice must follow the same rules to make recommendations designed to serve the best
interests of consumers by keeping costs low, recommending sound investments, and protecting
retirement savings from unnecessary risks. Americans who've worked hard to save for retirement
deserve peace of mind about their financial security.

For these reasons, | support the proposed rule and ask the Department of Labor to finalize it.

U Arce tH aad

Walter Houser