From: Bill McCollum [mailto:wlmccollum@bellsouth.net] 

Sent: Wednesday, February 03, 2010 12:01 PM 

To: EBSA, E-ORI - EBSA 

Subject: RIN 1210-AB33 

I believe the proposal to mandate lifetime income features for defined contribution (DC) plans is 

misguided for the following reasons: 

• The proposal fails to address two of the biggest problems of DC plans and reasons why 

they fail to provide retirement security: a) inadequate fiduciary oversight, b) high fees 

and c) no investment advice for participants. I encourage you to read the work done by 

Matthew D. Hutcheson. (See attachments.) Hutcheson has previously testified before 

Congress about these issues. DC plans need greater transparency, participant advice 

sound and sound, low cost investment options. Instead, the DC industry (mutual funds, 

brokers firms and insurance companies) attempt to maintain the status quo by offering 

only product-based answers (annuities, age-based investment portfolio options, GICs, 

etc.) and cookie-cutter participant educational materials. What’s needed is reform, not 

more proprietary product. 

• DC participants already have access to lifetime income solutions. They simply take a 

lump-sum distribution at retirement and roll the proceeds into an annuity of their choice

from a provider of their choice. 

• Annuities are not the panacea the insurance industry would like everyone to believe. 

Firstly, annuities are only as good as the insurance company. (Remember AIG, formerly 

one of the largest US insurers.) Secondly, annuities can have inordinately high expenses 

– in order to pay high commissions to the selling agent/broker. (Consider the ongoing 

controversy over aggressive sales tactics employed to sell equity-indexed annuities to 

seniors.) A 2009 study conducted by Cerulli Associates showed that only 20% of 

Registered Investment Advisors (these are fiduciaries) would consider annuity products 

for rollovers; by contrast, non-fiduciary brokers/agents were much more inclined to use 

them. Could it be the commissions? 

(http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20090501/FREE/905019993

&ht=rias least likely to use annuities) 

 

 

Question #2 

Participants want freedom to choose: annuitized lifetime income or not. 

Questions #3, 6 

All participants who have the ability to do a rollover can obtain lifetime income solutions by 

purchasing annuities. 

Questions #11, 18, 20 

DC plans should provide for participant “advice” from an investment advisor to address these 

issues. The delivery of advice from a fiduciary advisor will address behaviorial issues. 

Question #17 

Something that is needed is full disclosure of fees and conflicts of interest. 

William L. McCollum

Eagle Financial Management Services, LLC

400 Travis St., Ste. 518
Shreveport, LA 71101

Phone: 318-675-0826

Fax: 318-675-0828

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