DOL to be Applauded on New Investment Advice 408 (b)(2) rules 

I want to lend my strong support to the DOL proposed rules that will help put billions back in participants pockets for retirement 

by making plans go to higher quality lower fee investments, while giving them more higher quality independent advice. 

Opponents are trying to divert attention away from the real issues “fees and fiduciary duty”, by going off on tangents on active 

vs. passive, and the big bad government dictating investment strategies. . 

I think the DOL is underestimating the net $6 billion benefit to participants. I think it could be double or triple that, driven 

primarily by the lower fees that independent oversight will drive. By adding trust and confidence into the system it could 

encourage higher contributions by participants which would have billions in positive impact. 

In the final rules I think the DOL needs to more clearly separate and clarify the independent investment advice to plan sponsors 

and independent advice to plan participants. I feel the bulk (80%+) of the benefit comes from the higher transparency and 

independence standards on the plan sponsors as they select investment managers. 

For example a plan with a conflicted broker consultant may offer an active stock fund at a fee of 150 basis points and an index

fund at 70 basis points. A plan with an independent consultant offers the same active stock fund at 90 basis points and an

index fund at 20 basis points. An advisor to participants if they have bad choices at the plan level cannot correctly do their 

job. 

Lobbyists for the fund industry and insurance industry are coming up with their own spin to protect their excessive fees and 

total lack of fiduciary responsibility. I hear the insurance lobby is trying to get an exemption for their high fee general account 

and separate account Stable value products. These products have hidden fees as much as 150 basis points that are not 

disclosed. The DOL must resist any overtures from the insurance industry to exempt or grandfather these high risk, high fee

products. If these single entity credit risk products are exempted in any way the DOL is implicitly backing “Too big to fail” 

status on insurance companies and adding risk to the system. 

Another false criticism lobbyists will claim is that people will get less advice. Let's say you go to buy a used car. Would it be 

more access to advice if you got to talk to 5 different used car salesmen on the same lot all trying to sell you the same cars. Do 

you think if you talked to 100 used car salesmen that you would come away with a better car? It comes down to my opinion 

that anyone who is conflicted is just selling not giving advice, so that under that definition the new DOL Regulations leads to

much more real independent advice. 

I agree with the following statement from the ASPPA letter to the DOL. “Just because a given portfolio is diversified does not 

make it prudent if it is also expensive and riddled with conflicts of interest for the manager. The fact that a given investment is 

less expensive than another competing investment is meaningless if that original investment is not appropriate for a given 

investor or portfolio.” 

This goes back to the focus at the plan level is the key, and that advice on the participant level is meaningless if the choices 

available are all flawed. 

This new DOL rule if enacted as proposed with clarified direction for plans would add real lasting value for the entire private

retirement system and its participants. 

Chris Tobe, CFA, CAIA 

Sr.Consultant BCAP 

502-648-1303 

Chris Tobe, CFA, CAIA has over 23 years experience working as a consultant, money manager and regulator and is currently a 

Senior Investment Consultant with BCAP in Louisville KY. He has been quoted on 401k Investments in the Wall Street Journal, 

Barron’s and Market Watch. He has testified on target date funds to the SEC-DOL joint hearing and submitted written testimony 

to the DOL ERISA Advisory Council’s hearing on Stable Value in July 2009. He is a Trustee for the Kentucky Retirement Systems 

and until recently a Sr. Consultant for NEPC. For nearly 7 years he served as a director for the Pension & Savings Group of

AEGON Institutional Markets and in 2006 wrote the response to the DOL on target date funds in the QDIA. In the late 90’s he 

served as an investment regulator for the Kentucky State Auditor. He has published over 30 investment articles and has spoken 

at a number of conferences including CIEBA,IFEBP, SVIA, NAST, & NAGDCA. 

good.larry@dol.gov

e-ORI@dol.gov 

New Investment Advice 408 (b)(2) rules