Francisco “Quico” Canseco

David Schweikert

Sean Duffy

Nan Hayworth

Michael Grimm

Jim Renacci

Robert Hurt

Bill Huizenga

Steve Stivers

Robert Dold

Stephen Finchert



Congress of the United States
Washington, AC 20515

July 29, 2011

The Honorable Hilda Solis
Secretary of Labor

United States Department of Labor
200 Constitution Avenue NW cae: =
Washington, DC 20210 nm

Dear Secretary Solis,

We are writing to express our concern over the Department of Labor’s October 22, 2010
proposed rule, “Definition of the Term Fiduciary.” The proposed rule alters the criteria of who is
to be considered a “fiduciary” under the Employee Retirement Income Security Act (ERISA).
The rule would significantly change the regulatory and legal environment for those involved in
managing and advising retirement plans, retirement plan participants, and owners of Individual
Retirement Accounts (IRA’s).

The Department stated in the proposed rule that it believes “...amending the current
regulation to establish additional circumstances where investment advice providers are subject to
ERISA’s fiduciary responsibilities would better protect the interests of plans and their
participants...” However, we feel that the Department’s approach to amending the fiduciary
definition is misguided.

Specifically, we believe that the Department did not properly take into account the costs
that are likely to accrue to individual investors as a result of this rule. This is alarming as it
appears that individual investors will pay a significant portion of the tremendous costs that we
believe are a likely result of this rule going into effect.

We are particularly concerned about the costs that the rule could impose on individuals
who save money through IRA’s. IRA’s were created in 1974 and have become an important
source of retirement security for millions of Americans. Today, 49 million American households
have approximately $4.5 trillion invested in IRA’s. Because they do not require minimum
contributions, IRA’s appeal to savers of all income levels.

The proposed DOL rule would force owners of “brokerage” IRA’s to either terminate
their relationship with their current provider or convert to “advisory” IRA’s in order to access
investment services. According to an April 2011 report from Oliver Wyman, IRA investors
currently prefer brokerage IRA’s to advisory IRA’s by a substantial margin. This preference is
especially pronounced for accounts with lower balances — the study found that 98% of IRA’s
with less than $25,000 were brokerage relationships. By converting to an advisory relationship
where an annual asset-based fee would be assessed, the study found that direct costs to IRA
owners would increase by anywhere from 75% to 195%. Oliver Wyman also concluded that
approximately 7.2 million IRA’s would not even qualify for an advisory account because of
minimum account levels in the industry. Even if these minimums were relaxed, JRA owners

PRINTED ON RECYCLED PAPER



would be left with the unappealing choice of not being able to receive information and guidance
from a financial professional, or paying significantly increased costs to receive that advice, This
will make saving for retirement even more difficult for savers and investors.

Our nation went through the 2008 economic crisis in part because Americans were not
saving and instead living beyond their means. We should not impose additional costs or
restrictions on Americans who are doing the responsible thing by putting some of their hard
earned income into long term savings accounts. We request that the Department withdraw
and re-propose the regulation. A re-proposal will help insure that any changes to the fiduciary
definition address the concerns raised by hundreds of comments, provide additional opportunity
for comment, and provide adequate time for the Department to examine the costs and benefits of
this rule in a more thorough fashion. We believe that the concerns we raise here are only a
portion of the economic harm that could occur should this rule become final.

Sincerely,