JirpCosta Joe Courtney }
Memberfof Congress Member of Congress
abby eo
en

ry? Cuellar 4 Elizabeth Esty
Member of Congress lember of Congress
thaka Fattah Bill Foster
Member of Congress Member of Congress
Marcia L. Fudge K Gral
Member of Congress 5 Member of Congress
Pe
oe Alcee Hastings—__. Jim Himes
Member of.Congress se Member of Congress
Medlof Me fee 8 Peo
Michael M. Honda Steve Israel
Member of Congress Member of Congress
Henry } "Hank" John£on, Jr.
Member of Congress
“Rw,
Robin L. Kelly
Member of Congress Member of Congress
—— . ¥
5 Caml, kitten _
Joseph P. Kennedy, III Dan Kildee

Member of Congress Member of Congress


Qt Sham Tak Zab

Brad Sherman Mark Takano
Member of Congress Member of Congress

Mike Thompson Dhug, Sala
Member of Congress__-7 Member of Congress

/\| Pua Sa | Pus
y on ages
Norma Torres Juan Vargas

Member of Congress lember of Congress
Mare Veasey alz
Member of Congres Member of Congress

Cehiclehn Prederice A ldsfoon

Frederica Wilson
Member of Congress Member of Con,

John Yayuth
Member of Congress

Piduydre

Pete Aguilar
Member of Congress

Donald Norcross i
Member of Congress Member of Congress



Nbruathclona

Alma Adams
Member of Congress

yce Beatty
Menyber of Congress

dh Bishop |

Member of Congress

Cnainailt Geico

Corrine Brown
Member of Congress

John Carney
ember of Congress

ede 0, Womko

Yvette Clarke

a Congress

Auf x

Member of Congress

Brad Ashford

Donald S. Beyer Jr.
Member of Congress

A of oe

Member of Congress

Julia Brownley
Member of Congress

Michael Capuano
Member of Congress

pee (ae

Pt hf nus

Ki Castor
Member of Congress

Un Licey Cla
William "Lacy" Clay
Member of Congress

Member of Congress



abe cat

Derek Kilmer Ann Kirkpatrick

Member of wy, Member of Congress
ds Brenda L Chile Ted Lieu ae

Member of Lbk Member of Congress

Dave  Fochiok Ben Ray Luan
Member of Congress Member of Congress

. | . i . \
Michelle Lujan Grisham Sean Patrick Malo

Member Spin WA Member of Congress

ames a daa’ MeGotem

er/f Congress

—
Seth Moulton
Member of Congress
Patrick Murphy : Ge 5
Member of Congress Member of Congress
Rick Nolan Frank Pallone, Jr.

Member of Congress Member of Congress


Qanny ch Quaies

Danny K. Davis Denny Heck
Member of Congress Member of Congress

Donald a

Member of Congress


Congress of the United States
Washington, AC 20515

September 24, 2015

The Honorable Thomas E. Perez
Secretary

U.S. Department of Labor

200 Constitution Avenue, NW
Washington, DC 20210

Re: Definition of the Term “Fiduciary;” Conflict of Interest Rule — Retirement Investment
Advice (RIN 1210-AB32)

Dear Secretary Perez:

We appreciate the opportunity to comment on the Department of Labor's (the Department) April
14, 2015, proposed rule, RIN 1210-AB32 (the Rule), defining who is a "fiduciary" of an
employee benefit plan or individual retirement plan under the Employee Retirement Income
Security Act of 1974 (ERISA) and the Internal Revenue Code of 1986. We agree with the
Department that updated retirement investment rules that align the incentives of advisors with
investors will greatly enhance retirement security of millions of Americans. We would like to
highlight several areas where we believe the Department could further refine the Rule to ensure
it better serves the needs of retirement investors.

It has been widely noted, including by the White House Council of Economic Advisors study
accompanying the Rule, that the landscape for retirement in America has undergone dramatic
changes in the 40 years since passage of ERISA due to the shift away from defined benefit
pension plans to defined contribution 401(k) and Individual Retirement Account (IRA) plans.
The shift has necessitated that Americans be more involved in their retirement planning and to
increasingly rely on advice from financial professionals.

The Department has stated that it is the intent of the updated Rule to accommodate various
business models, compensation practices, and products. In large part, we agree that the
framework of the Rule provides the flexibility to meet those goals, especially with the inclusion
of the new Best Interest Contract (BIC) exemption, but we continue to hear from constituents,
academics, providers, and investors that there are specific provisions of the Rule that may cause
market disruptions and limit the ability of segments of the market to reasonably access advice.
The following provisions are a sample of some of the concerns we believe need to be addressed.

Best Interest Contract Exemption

The BIC is intended as a principle-based exemption that is central to accommodating various
common business and compensation models that would otherwise be prohibited under the Rule,
while retaining an enforceable “best-interest” standard to protect investors. We are supportive of
this flexible exemption structure designed to ensure that moderate savers continue to have access
to investment advice, but are concerned that there may be practical problems for providers to

PRINTED ON RECYCLED PAPER


Bill Pascrell AL

Member of Congress

cott A. rs
Member of Congress

A

Chellie Pingree
Member of Congress

ya
mber of Congress

harles B. Rangel
Member of Congress

DAA Q—

Cedric Richmond
Member of Congress

oO

Adam Schiff
Member of Congress

Str Atwell
Terri Sewell
Member of Congress

LEED

Ed Perlmutter
Member of Congress

| lh. Barr.

Collin C. Peterson
Member of Congress

Mark Pocan
Member of Congress

Mike Quigley
Member of Congress

Kathleen M. y,,
Member of Congress

Linda one 5

Member of Congress

KALLA

Kurt Schrader
Member of Congress

fember of Congress


implement the exemption as proposed. We believe that the Department could implement the BIC
using a less prescriptive and more principles-based approach.

The Department should continue to work with stakeholders to identify solutions to the issue of
how to bring new and existing customers within the BIC by providing for a legally-enforceable
commitment on the part of advisors without the administratively burdensome task of requiring
signed contracts prior to any communication. We also believe the Department should examine
the current disclosure requirements contained in the BIC and consider options for simplification,
including incorporating already required disclosures. The BIC should also harmonize the
standard for offering proprietary products, as to not disadvantage certain business plans without a
corresponding consumer advantage and in accordance with Section 913 of the Dodd-Frank Wall
Street Reform and Consumer Protection Act. Finally, we believe that it would be appropriate for
the Department to make the BIC available for advice to small businesses maintaining participant-
directed plans, notwithstanding the availability of the “platform provider” exemption.

Education Exemption

The Rule narrows the previous “investment advice” carve-out established in Interpretive Bulletin
96-1 to exclude advisors from providing examples of specific investment products, plans, or
alternatives. Models for asset allocation and general information regarding investment vehicles
without some additional, tangible examples may be frustratingly vague for investors. We believe
the Department would benefit retirement savers by maintaining flexibility for advisors to provide
investment education.

Lifetime Income Options

Annuities provide retirement savers a guaranteed lifetime income option, similar to what defined
benefit pensions and Social Security offer. The Department has recognized the value of annuities
as part of a diversified retirement strategy and has acted to encourage and facilitate the use of
lifetime income options in retirement savings accounts. Unfortunately, the Rule’s emphasis on
cost seems to discount the value of annuity products. As you know, the value of the guarantee
may result in higher costs than other retirement options, but the guarantee offered by the annuity
is a value to consumers not offered by other, lower cost options. Additionally, costs associated
with setting up the annuity amortized over the life of the annuity may, in fact, bring the costs in
line with options that initially appeared cheaper. The Department should, therefore, take steps to
clarify that the Rule does not disadvantage lifetime income options.

Implementation

Given the number of outstanding “Questions” and “Requests for Comments” in the Rule, we
urge the Department to continue to engage and maintain a transparent dialogue with stakeholders
and Members of Congress. This is an essential and important step, because feedback on potential
changes will determine how successfully the Rule is implemented. We would also strongly
encourage the Department to consider options for convening a small working group of industry
professionals and consumer advocates to aid with the finalization of the Rule as to further ease
any final implementation issues.


In addition, given the significance of the Rule to the U.S. retirement saving framework, we
believe it would be appropriate for the Department to provide a safe harbor for "good faith
implementation," especially given the complexity of the Rule and the many outstanding
questions regarding a final rule. We believe this would provide an opportunity for small
businesses and financial advisors to comply with the rule without the threat of lawsuits, while
still ensuring that the Rule benefits retirement savers. A safe harbor would help ensure continued
access to retirement investment advice and minimal disruptions to the current marketplace.

We strongly support and share the Department’s goal to ensure financial advisors act in the best
interests of their clients. In order to have a successfully implemented rule, it is vital that the
proposal doesn't limit consumer choice and access to advice, have a disproportionate impact on
lower- or middle-income communities, or raise the costs of saving for retirement.

A number of studies have estimated the retirement gap for Americans is between $7 and $14
trillion, with one-in-five Americans approaching retirement age having insufficient retirement
savings. The Rule should close this gap and protect access to investment information to help
Americans responsibly save for retirement. We urge the Department to continue to seek a
balanced approach to both consumer protection and access to retirement investment advice for
all Americans.

Sincerely,

Teeth
Past aidnah manuel Clea 7:

of Congress Mei f Congress
Ron Kind Ann McLane Kustei
Member of Congres; Member of Congress

Richard Neal

Member of Congress Member of Congress

Kyrsten Sinema
ember of Congress