April 12, 2011

DELIVERED VIA E-MAIL TO e-ORI@dol.gov

Office of Regulations and Interpretations

Employee Benefit Security Administration

Attn: Definition of Fiduciary Proposed Rule

Room N-5655

U.S. Department of Labor

200 Constitution Avenue, NW

Washington, DC 20210

RE: Definition of Fiduciary Proposed Rule, 29 CFR §2510.3-21(c)

To Whom It May Concern: 

Fi3601 appreciates the opportunity to provide additional comments on the proposal to broaden 

the definition of “fiduciary” under Section 3(21) of the Employee Retirement Income Security 

Act (“ERISA”) and the related regulation at 29 CFR §2510.3-21(c). We reiterate our support of 

the Department of Labor’s (the “Department”) efforts to provide greater protection for retirement 

plans and their participants and beneficiaries,

2

During the comment period and testimony, several commenters noted their concern that costs 

will increase for plans and participants. However, while these commenters generally refer to 

“costs” and to several categories of costs (e.g., compliance, retraining, fiduciary litigation), rarely 

and seek to provide additional comments 

addressing specific issues raised prior to and during the Department’s hearings March 1 and 2, 

2011. 

 1 Fi360 offers a full circle approach to investment fiduciary education, practice management, and support. 

Our mission is to promote a culture of fiduciary responsibility and improve the decision making processes of 

investment fiduciaries, including investment advisors, managers, and stewards. With legally substantiated Practices 

as our foundation, we offer training, tools, and resources in support of that mission. We also manage the Accredited 

Investment Fiduciary® (AIF®) and Accredited Investment Fiduciary AnalystTM (AIFA®) designation programs. 

AIF designees receive training that provides a unique comprehensive overview of fiduciary standards of excellence, 

asset allocation, preparation of investment policy statements, manager search and due diligence, performance 

measurement, and other related subjects. AIFA designee training builds on that foundation and prepares students to 

provide Fiduciary Assessments to institutions. At present, there are over 4,800 active AIF and AIFA designees. 

2 Fi360 submitted its original set of comments in support of the Department’s proposal on February 3, 2011, 

http://www.dol.gov/ebsa/pdf/1210-AB32-151.pdf.
Office of Regulations and Interpretations

April 12, 2011

Page 2

do the commenters attempt to substantiate the basis for their analysis, summarily concluding that 

the costs will outweigh any potential benefit derived from the Department’s proposal.3 In cases 

where summary data or assumptions of cost are provided, no corresponding raw data for these 

summaries and assumptions are provided.4

 Although one large service provider quantified costs 

associated with compliance with other regulations during the March hearing, one isolated 

example from a particular provider is not necessarily demonstrative for an entire industry of 

various providers nor for this particular regulatory proposal, which differs in some respects from 

other recent regulatory changes.5

In addition, one commenter points to the SEC staff’s study of broker-dealer and investment 

adviser obligations as a basis for identifying costs.6 This commenter, however, fails to recognize 

that SEC staff in most cases only stated that services offered “might” change and that costs 

“may” or “could” change as the result of a uniform fiduciary standard being implemented by the 

SEC.7 While the SEC and Department have asked for quantitative proof of costs, commenters 

failed to provide it during the SEC staff’s study and the Department’s comment period for the 

current proposal.

8

We would also note that while we believe thorough analysis of the costs and benefits 

associated with any regulatory proposal is essential, when dealing with fiduciary 

regulation and the protections it affords to investors, we believe that a broader analysis 

 Moreover, commenters have failed to distinguish between one-time costs and 

ongoing costs and how these expenditures will affect plans and participants. In addition, it is 

clear that certain commenters are most concerned about costs as they relate to IRAs, while others 

are focused more on costs related to plans, but at times these commenters failed to clearly 

distinguish between the two.

 3 See, e.g., U.S. Department of Labor Employee Benefits Security Administration Public Hearing, Definition 

of Fiduciary Investment Advice, 84-94, (Mar. 1, 2011) (“March 1 Definition of Fiduciary Hearing”) (statement of 

Ken Bentsen, Executive Vice President for Public Policy and Advocacy, Securities Industry and Financial Markets 

Association (“SIFMA”)), at http://www.dol.gov/ebsa/pdf/1210-AB32-HearingTranscript1.pdf. 

4 See, e.g., March 1 Definition of Fiduciary Hearing, 196-197 (statement of Jim McCarthy, Managing 

Director, Morgan Stanley Smith Barney); Comment Letter from T. Timothy Ryan, Jr., President and CEO, SIFMA, 

Feb. 3, 2011 (“SIFMA Letter”), available at http://www.dol.gov/ebsa/pdf/1210-AB32-HearingTranscript1.pdf

(citing study conducted by Oliver Wyman). 

5 See March 1 Definition of Fiduciary Hearing at 218-222 (statement of Jim McCarthy, Managing Director, 

Morgan Stanley Smith Barney).

6 SIFMA Letter at 9, 15 n.23. 

7 See Staff of the U.S. Securities and Exchange Commission, “Study on Investment Advisers and BrokerDealers,” 146-165, January 2011 (“SEC Fiduciary Study”), at 

http://www.sec.gov/news/studies/2011/913studyfinal.pdf. 

8

 See, e.g., SEC Fiduciary Study, at 144 (“Generally, commenters did not quantify particular costs or even 

give a range of costs that they would incur for the various potential outcomes.”).
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April 12, 2011

Page 3

needs to include potential losses and benefits to plan participants and their beneficiaries 

under fiduciary principles. Stated another way, at what point should relationships based 

on fiduciary principles of care and loyalty be compromised or diminished in order to 

protect business interests over the interests of plans and participants? The history of 

fiduciary principles is grounded in the recognition that investors place their trust in and 

rely on an expert service provided by fiduciary advisors. And in the instant case, the 

Department thought it was necessary to act because of the difficulties experienced by 

Department investigators in determining fiduciary status of certain service providers and 

advisors to plans.9

Finally, we would like to address assertions that the Department’s actions are inconsistent 

with the Dodd-Frank Act and related SEC actions.

 Thus, we believe that while it is important to ensure that plans and 

participants will have access to products and services, it is just important to ensure that 

the determination of fiduciary status be addressed in a way that does not permit those 

holding a position of trust to evade, purposely or otherwise, the intent of Congress in 

originally imposing fiduciary obligations. 

10 We believe such statements are 

misleading and mischaracterize the state of regulatory affairs in Washington today. 

While it is true the SEC was granted authority to adopt rules setting forth a fiduciary 

standard of care for both broker-dealers and investment advisers, the SEC operates under 

a different legislative structure than the Department and is also in a much different 

posture with regard to its current rulemaking initiatives. In fact, while SEC staff has

released a report on broker and adviser obligations, the SEC has yet to propose any rules 

which can be compared to the Department’s current initiative.11

 9 See U.S. Department of Labor Employee Benefits Security Administration Public Hearing, Definition of 

Fiduciary Investment Advice, 47, (Mar. 2, 2011) (statement of Alan Lebowitz, Deputy Assistant Secretary for the 

Employee Benefits Security Administration), at http://www.dol.gov/ebsa/pdf/1210-AB32-HearingTranscript2.pdf; 

Definition of the Term “Fiduciary,” 75 Fed. Reg. 65,263, 65,265 & 65,2675 (Oct. 22, 2010). 

As we have previously 

stated, we believe it is important for the Department to be aware of new SEC initiatives, 

but an impending rulemaking alone is not a reason to delay overdue clarification of 

ambiguities in existing law that ultimately provides greater protection for plans and 

participants. 

10 See March 1 Definition of Fiduciary Hearing at 86, 195-196 (statements of Ken Bentsen, Executive Vice 

President for Public Policy and Advocacy, SIFMA, and Jim McCarthy, Managing Director, Morgan Stanley Smith 

Barney).

11 Recent statements by SEC senior staff and industry observers indicate that the SEC likely will not have a 

proposal until late 2011 at the earliest. See Joseph Giannone, US SEC sees fiduciary standard rules late in 2011, 

Reuters (Apr. 7, 2011), available at http://www.reuters.com/article/2011/04/07/wallstreet-regulationsidUSN0720336220110407. Based on such statements, it is not even clear that SEC staff have begun to draft 

proposed rules for the Commission to consider.
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April 12, 2011

Page 4

Conclusion

We truly appreciate the opportunity to provide our views on these important issues. Please do not 

hesitate to contact us at (412) 221-0292 if you have any questions or would like additional 

information. 

Sincerely, 

Blaine F. Aikin

CEO

Duane Thompson

Senior Policy Analyst

Kristina A. Fausti

Director of Legal and Regulatory Affairs