100 Half Day Road | Lincolnshire, IL 60069 

t 847.295.5000 | f 847.295.7634 | aonhewitt.com 

December 17, 2010 

Submitted electronically via the Federal Rulemaking portal @ www.regulations.gov

Attention: Definition of Fiduciary Proposed Rule 

Office of Regulations and Interpretations 

Employee Benefits Security Administration 

Room N–5655 

U.S. Department of Labor 

200 Constitution Avenue, NW. 

Washington, DC 20210

Dear Sir or Madam, 

Subject: Definition of the Term “Fiduciary” (RIN 1210-AB32) 

Aon Hewitt welcomes the opportunity to submit for consideration to the Department of Labor our comments 

relating to the proposed definition of the term “Fiduciary” under 29 CFR 2510.3-21(c). We support the 

Department’s goal of updating this rule for changes in the financial industry and the expectations of plan 

participants and beneficiaries, as well as the intent to better protect participants and beneficiaries from 

conflicts of interest and self-dealing. In particular we believe that these goals can best be achieved by 

expanding the definition of investment advice to include the recommendations to a participant to take a plan 

distribution. 

Who We Are 

Aon Hewitt is the global leader in human capital consulting and outsourcing solutions. The company 

partners with organizations to solve their most complex benefits, talent, and related financial challenges, 

and improve business performance. Aon Hewitt designs, implements, communicates, and administers a 

wide range of human capital, retirement, investment management, health care, compensation, and talent 

management strategies. With more than 29,000 professionals in 90 countries, Aon Hewitt makes the world 

a better place to work for clients and their employees. 

Investment Advice Should Include Recommendations to Take Plan Distributions 

In the preamble to the proposed regulation, the Department requested comments on “whether and to what 

extent the final regulation should define the provision of investment advice to encompass recommendations 

related to taking a plan distribution.” Under the proposed rule, investment advice includes situations when a 

person “provides advice or makes recommendations as to the management of securities or other property” 

[for a fee or other compensation]. As discussed below, we believe that the Department should include a 

recommendation to a participant to take a plan distribution of the assets in his or her account in the 

definition of investment advice. 

A decision to take a plan distribution is comprised of two smaller but significant decisions: 

 First, the participant must decide whether to liquidate current investments. Investment decisions to buy 

or sell a particular plan investment option are at the core of a participant’s management of his or her 

plan account. This is true whether the sale of an investment is merely the prelude to investing in 

another plan investment option or the precursor to taking a plan distribution. In addition, if the 
Attention: Definition of Fiduciary Proposed Rule 

Page 2 

December 17, 2010 

100 Half Day Road | Lincolnshire, IL 60069 

t 847.295.5000 | f 847.295.7634 | aonhewitt.com 

recommendation does not encompass a total distribution, the participant must decide which (or how 

much of each) investment to liquidate. 

 Second, a participant must decide how to manage the distribution of the funds from his or her plan 

account, including the time, manner, form, and future custody of the plan distribution. The decision of 

where to invest assets outside of the plan is a critical component of the participant’s decision. 

In Advisory Opinion 2005-23A (December 7, 2005), the Department indicated that a recommendation to 

take a distribution does not constitute investment advice because the assets will be invested outside of the 

plan. At the time of the recommendation, however, the assets in question are assets of the plan. Therefore, 

differentiating between a recommendation to invest in plan options or to invest outside of the plan creates 

an inconsistency in the application of the ERISA fiduciary rules. It also appears to create a potential bias 

toward a recommendation to take a distribution because an adviser could both avoid ERISA fiduciary status 

and also recommend an investment in which it has a financial interest. 

We submit that while a participant has assets invested in the plan any recommendation is a 

recommendation as to the management of a participant’s securities in the plan. Such advice should 

therefore constitute investment advice under ERISA. In short, we view the application of fiduciary standards 

to advisers who recommend plan distributions as a logical application of ERISA’s fiduciary rules, and 

certainly in the best interests of participants and beneficiaries. 

Applicability of Other Laws 

The Department also inquired about what other laws might apply to recommendations to take a plan 

distribution. We agree that once assets are invested outside of the plan, those monies are no longer plan 

assets and no longer enjoy the protection under ERISA. Any investment advice provided after the 

participant takes a distribution would be governed by common law principles of fiduciary duty and individual 

state laws, if applicable. As noted, however, we believe that the initial recommendations provided to 

participants while the assets are still within the plan (e.g., divestiture and distribution) should be subject to 

ERISA. 

Costs and Benefits 

By extending the regulation to include the recommendations to take a distribution from the plan, we believe 

the associated costs would be minimal and that the benefits to participants and beneficiaries would greatly 

outweigh those costs. We also anticipate that treating all recommendations relating to the application and 

management of plan assets consistently may result in more participants leaving their assets in their 

employer plans. Retention of assets within a plan provides a participant or beneficiary with a number of 

rights and protections that they do not receive outside of the plan. Examples may include: 

 Protective oversight of a plan fiduciary that must exercise its obligations and duties under a prudent 

expert standard, in the best interests of participants and beneficiaries; 

 Access to unbiased advice and other decision support tools designed and operated with the best 

interests of plan participants in mind, often at prices significantly discounted from individual investment 

advice available in the retail market; 

 More highly personalized and tailored plan communications, including account statements, educational 

material, and fee disclosure information; and 

 Leveraged bargaining power of employer plans, resulting in lower investment costs within the plan 

when compared to similar investments outside the plan. 
Attention: Definition of Fiduciary Proposed Rule 

Page 3 

December 17, 2010 

100 Half Day Road | Lincolnshire, IL 60069 

t 847.295.5000 | f 847.295.7634 | aonhewitt.com 

Any recommendations to participants and beneficiaries to take a distribution from their qualified plan should 

be considered in the context of these potential advantages. Including such recommendations in the 

definition of investment advice will result in more balanced and unbiased recommendations that consider all 

options. 

Closing 

If you have any questions or comments, please contact the undersigned at the telephone number or email 

address provided below. 

Sincerely, 

Aon Hewitt 

Ted Novy 

(847) 295-5000 

ted.novy@hewitt.com