8515 East Orchard Road 

Greenwood Village, CO 80111 

(303) 737-3000

Address mail to: P.O. 173764 

Denver, CO 80217-3764

February 3, 2011 

Submitted Electronically – Re: Definition of the Term “Fiduciary” (RIN 1210-AB32) 

Office of Regulations and Interpretations 

Employee Benefits Security Administration 

U.S. Department of Labor 

200 Constitution Ave., NW 

Washington, DC 20210 

e-ORI@dol.gov 

Ladies and Gentlemen: 

We respectfully submit our comments on the Department’s proposed rule (the Proposal)1

redefining the term “fiduciary” with respect to the provision of investment advice under 

ERISA §3(21)(A)(ii). Given the significance of this proposal to the cost and availability 

of retirement plans, we very much appreciate the opportunity to share our thoughts with 

you. 

About Us:

Great-West Retirement Services® (“Great-West”), a business unit of Great-West Life & 

Annuity Insurance Company, is the fourth-largest retirement plan record-keeper in the 

United States.2

 We provide 401(k), 401(a), 403(b) and 457 retirement plan services to 

24,000 plans representing 4.4 million participant accounts and $138 billion in assets at 

September 30, 2010. We offer several different investment “platforms” that include both 

proprietary and unaffiliated investment products. In addition, we offer tools to our 

platform customers to assist their decision-making, including Fund Performance Reviews 

that provide information about the performance of platform investment options against 

selected criteria. Our services and products are marketed both by employees of GreatWest and also by independent broker-dealers, Registered Investment Advisors, insurance 

agents and other financial advisers. Our extensive experience in assisting retirement plan 

fiduciaries and participants informs our analysis of the Proposal.

 

 

1 75 Fed. Reg. 65263 (Oct. 22, 2010)

2 Based on total participant accounts at year-end 2009, as ranked by Plan Sponsor magazine in June 2010. 
2

Overview:

We agree that the retirement landscape has changed significantly since the Department’s 

adoption of the current regulation at 29 C.F.R. § 2510.3-21(c) 35 years ago, and we 

support the Department’s goal of improving the quality of advice received by plans and 

participants. However, we are concerned that the overly broad scope of the Proposal as 

currently written will not achieve this goal, but may instead impose significantly higher 

costs on plans and participants than the Proposal projects, and inhibit educational and 

marketing efforts that promote workplace retirement plans. 

The determination of fiduciary status is an issue of fundamental importance to both plans 

and service providers, as fiduciary status affects, directly and indirectly, the cost and 

availability of services. In assessing the professional insurance needed, the permissibility 

of a compensation arrangement under ERISA’s prohibited transaction rules, or the 

potential liability and responsibility of the provider and its employees, a service provider 

must be able to know, in advance and with certainty, whether it will be an ERISA 

fiduciary to its plan clients. Similarly, the plan must be able to determine whether the 

service provider will be a fiduciary in order to assess the reasonableness of the providers’ 

fees and its capabilities in providing the services in question. 

The Proposal greatly expands the potential scope of fiduciary status under ERISA. We 

acknowledge the Department’s attempt to limit this expansion through certain exceptions 

(such as for sales, platform operators, investment education and reporting and disclosure 

valuations); however, we are very concerned that these exceptions are neither sufficiently 

clear nor sufficiently broad. The ultimate impact of the Proposal on the fiduciary status 

of service providers depends on the interaction between the general rule and all of the 

exceptions, and the text of these provisions is not sufficiently clear to allow us to discern 

either the intended or the actual scope of the Proposal. Our comments seek to identify for 

the Department those provisions in the Proposal that are ambiguous or are likely to cause 

significant dislocation in common plan activities, and we offer suggested revisions 

attempting to address these concerns. However, we request that the Department use these 

comments to develop and publish a new proposed rule. Reproposing the rule is the best 

way to ensure that the Department strikes the proper balance in our voluntary employee 

benefits system, protecting the interests of participants while not unnecessarily—or 

unintentionally—increasing costs and reducing services. 

Broad General Scope:

The current regulation addresses two types of advice: recommendations regarding the 

value of securities and other property, and recommendations regarding the advisability of 

investing in, purchasing or selling securities or other property. For one giving such 

advice, the regulation establishes a five-part test: one is a fiduciary if the advice is (1) 

individualized, (2) provided regularly, (3) for a fee, (4) and provided pursuant to a mutual 

agreement (5) that the advice will be the primary basis for the plan’s decision-making. 

All five of the requirements must be met for an advisor to be deemed an ERISA 

fiduciary. 
3

 

According to the Preamble to the Proposal, the Department believes that the current 

requirement of meeting all five elements of the current regulation is too limiting, and 

permits conduct that is harmful to the interests of participants. However, we believe the 

effect of the Proposal would go well beyond addressing these concerns, and furthermore 

would result in significant transitional costs as many service providers respond to the 

uncertainty of the new proposal by either becoming fiduciaries - with the attendant costs 

of changing business models, including revising common variable compensation 

arrangements - or eliminating any services that might be construed as advice. In either 

event, we believe the resulting cost to plans and participants under the current Proposal 

would exceed the benefits the Department projects. For these reasons, the Department 

should reevaluate the projected costs and modify the Proposal to better tailor its 

requirements. 

• Broad Definition of Covered Adviser 

Under the Proposal, the five-part test of the current regulation would be replaced with 

four stand-alone provider categories; a service provider who falls within any one of the 

four would be deemed a fiduciary. We do not object to all of these categories—for 

example, we agree that an adviser representing itself as an ERISA fiduciary for the 

purposes of providing investment advice should be held to that standard, as paragraph 

(c)(1)(ii)(A) of the Proposal provides. However, we are concerned about the potentially 

very broad scope of two of the four categories. 

Affiliate Fiduciary Status and Bundled Services 

The second category in paragraph (c)(1)(ii)(B) of the Proposal would capture a service 

provider who is already a fiduciary to the plan for another purpose, even if “indirectly 

(e.g., through or together with any affiliate).” We urge the Department to clarify in the 

Proposal that this is not intended to conflict with the position taken by the Department in 

Aetna Advisory Opinion 97-16A (AO 97-16A) that a record-keeper in a bundled service 

arrangement will not be considered a fiduciary itself merely as a result of its affiliation 

with a person who is a fiduciary.3

 We do not believe that a record-keeper in a bundled 

service arrangement should be subject to fiduciary investment adviser status merely 

because an affiliate is, for example, an ERISA §3(38) investment manager with respect to 

the plan. Bundled service providers offer a very valuable and cost-effective service to 

plans, and clarification of this paragraph will help reduce confusion regarding the 

fiduciary obligations of service providers within the bundle, as well as ensure parity with 

independent record-keepers. 

3

 In AO 97-16A, the Department wrote, “You have assumed that ALIC, an affiliate under common control with 

ALIAC, is a fiduciary with respect to the Plans by virtue of exercising authority or control over Plan assets invested 

in separate accounts maintained by ALIC. There is nothing, however, in your submission to indicate that ALIAC is 

in a position to (or in fact does) exercise any authority or control over those assets. Accordingly it does not appear 

that ALIAC would be considered a fiduciary merely as a result of its affiliation with ALIC.” 
4

 

Very Broad “May Be Considered” Standard 

The fourth category (in paragraph (c)(1)(ii)(D) of the Proposal) is so broadly written as to 

likely include a very large proportion of service providers currently offering nonfiduciary services to plans. It requires merely an understanding that the advice “may be 

considered” in the fiduciary’s decision-making and “will be individualized” to the needs 

of the plan or participant. Non-fiduciary service providers will find it very difficult to 

answer common plan questions, such as questions about automatic enrollment, Qualified 

Default Investment Alternatives (“QDIA”) selection, or the differences between specific 

investment options, without providing “individualized” advice that “may be considered” 

by the fiduciary. Indeed, the Department should wish to encourage service providers to 

give fulsome answers to these questions, but the current Proposal discourages helpful 

answers with the threat of fiduciary status. 

Further, the broad scope of paragraph (c)(1)(ii)(D) of the Proposal likely will capture 

many service providers who traditionally have not been fiduciaries under the plan, 

resulting in higher costs for plans and participants. For example, ERISA plans and plan 

asset investment vehicles4

 commonly retain attorneys to provide legal advice in 

connection with complex financial transactions. Such legal advice could easily be 

construed as a recommendation for a fee regarding the advisability of an investment 

under paragraph (c)(1)(i)(A)(2) that is individualized and may be considered by the plan 

under paragraph (c)(1)(ii)(D). Similarly, common services provided by accountants and 

actuaries relating to valuation or the new “management” form of advice (see discussion 

below) may well be captured by the broad scope of the “may be considered” standard. 

While the exceptions included in the Proposal (which are addressed in detail below) may 

somewhat mitigate the broad scope of the general rule, the breadth of this Proposal would 

deny many plan fiduciaries the discretion to intelligently allocate fiduciary responsibility. 

If the plan’s fiduciaries are willing and capable of bearing full fiduciary authority for 

investment decisions, the decision to work with non-fiduciary service providers may be 

prudent and cost-effective. Non-fiduciary service providers under the current regulation 

are a useful source of information for plan fiduciaries, and help educate plan fiduciaries 

to better carry out their duties. Because the Proposal undercuts the meaningful insight 

and experience to be provided by non-fiduciary service providers, it may force plan 

fiduciaries to hire additional fiduciary service providers, at greater expense. 

We urge the Department to consider alternatives to the broad rule of the Proposal, and to 

revise paragraph (c)(1)(ii)(D) to target the Department’s enforcement concerns more 

precisely. Changing the fiduciary status of a potentially very wide range of service 

providers does not seem the most efficient means to address the specific enforcement 

concerns identified by the Department. For example, the Preamble discusses undisclosed 

conflicts by some non-fiduciary service providers, such as pension consultants. To target 

4

 Investment vehicles themselves subject to the fiduciary requirements of ERISA Title I—see ERISA §3(42) and 29 

CFR §2510.3-101. 
5

 

this class of entities, the paragraph could be revised to deem as fiduciaries advisors who 

provide advice, but fail to disclose such conflicts by referencing the disclosure 

requirements of the recently-promulgated Interim Final §408(b)(2) regulation.5

 This 

would significantly reduce the burden of the Proposal on plans, participants and service 

providers, while addressing the Department’s enforcement concerns.6

 

• Expansion of Categories of Advice 

Similarly, we are concerned about the scope of the new type of “fiduciary advice” 

identified in paragraph (c)(i)(A)(3) of the Proposal, advice “as to the management of 

securities or other property.” The Proposal does not define the term “management,” and 

the Preamble notes only that it “would include, for instance, advice and recommendations 

as to the exercise of rights appurtenant to shares of stock (e.g., voting proxies), and as to 

the selection of persons to manage plan investments.” 

As a provider of non-fiduciary record-keeping and investment platform services (among 

other services), we are concerned by the ambiguity inherent in this undefined concept. 

We provide our platform and non-platform clients with a great deal of information 

regarding the investment options selected by the plan’s fiduciaries. It is not clear from 

the Proposal whether any of this information could be viewed as “management” advice. 

The effect on services provided to plan clients that hold illiquid or unusual property is 

also unclear. Given that plans are permitted under ERISA to hold virtually any asset as 

part of a prudent and diversified portfolio, service providers need more clarity as to what 

constitutes “management” advice with respect to these assets, which could include real 

estate, art, or other property. 

Thus, we urge the Department to define more clearly what it means by “management,” 

and suggest that revising the paragraph to reference the two examples listed in the 

Preamble would be sufficient. The Department could, for example, simply state in 

paragraph (c)(i)(A)(3) that management advice is advice “as to the selection of persons to 

manage plan investments and as to the voting of proxies and the exercise of rights 

appurtenant to shares of stock.” 

5 75 Fed. Reg. 41599 (July 16, 2010)

6 A possible revision to paragraph (c)(1)(ii)(D) of the Proposal would be: “Provides advice or makes 

recommendations described in paragraph (c)(1)(i) of this section pursuant to a mutual agreement, arrangement or 

understanding, written or otherwise, between such person and the plan, a plan fiduciary, or a plan participant or 

beneficiary that such advice may be considered in connection with making investment or management decisions 

with respect to plan assets, and will be individualized to the needs of the plan, a plan fiduciary, or a participant or 

beneficiary; and fails to provide the disclosures required by 29 C.F.R. § 2550.408b-2(c).” While the Proposal 

removes both the “primary basis” and “mutual understanding” requirements of the current regulation, the Preamble 

addresses only the Department’s concerns with the primacy of advice, and expresses no concern regarding 

mutuality. We believe the mutual understanding of the parties must be clear given the significance of fiduciary 

status, and retain the mutuality requirement in this revision. Indeed, without a meeting of the minds regarding 

fiduciary status, ordinary notions of contract rights would suggest that imposing a fiduciary standard on a service 

provider for a casual observation would be inequitable. 
6

Concerns Regarding Exceptions:

As discussed above, we appreciate the Department’s attempt to limit the broad scope of 

the Proposal’s general rule. However, we believe the exceptions, as drafted, are neither 

broad enough nor clear enough to provide certainty as to a service provider’s fiduciary 

status. Indeed, we cannot be certain, based on the text, whether we have properly 

understood the Department’s intent. Accordingly, we offer the following observations on 

the Proposal’s exceptions: 

• Exception for Participant Education Defined by Interpretive Bulletin 96-1 

We applaud the Department’s decision in the Proposal to retain the exemption from 

fiduciary investment advice for participant education in Interpretive Bulletin 96-1 (IB 96-

1). IB 96-1 is valuable guidance that allows millions of participants to receive basic 

investment information, helping them to avoid common investment mistakes such as lack 

of diversification or the failure periodically rebalance their portfolios. 

However, we strongly believe that any final regulation should expand this exception to 

include plan-level education. At Great-West, we commonly assist our clients in 

understanding their responsibilities as plan fiduciaries, or evaluating issues such as the 

significance of section 404(c) status or how automatic enrollment and QDIAs would 

impact their plans. We are very concerned that this educational information could be 

considered fiduciary advice. We do not believe that the Department’s goal of improving 

the security of employee benefit plans will be increased if service providers cease 

providing basic fiduciary education information to their plan clients due to fear of 

fiduciary liability. 

We urge the Department to build on its success in IB 96-1, which clarifies when 

information provided to a participant is fiduciary advice or investment education. We 

believe that by developing a parallel bright-line standard for educational information 

provided to plan fiduciaries, the Department will encourage service providers to provide 

value to their plan clients by helping these fiduciaries better understand their duties and 

obligations. 

We believe the Department should move forward with such guidance regardless of the 

final disposition of the Proposal, but we also believe the Proposal should not move 

forward without such guidance due to the significant chilling effect the Proposal could 

have on these beneficial conversations between plans and their service providers. 

We also believe that the Proposal should specifically explain that IB 96-1 applies to 

education provided to IRA holders as well as to participants in ERISA-covered plans. 

While we believe that the principles of IB 96-1 are intended to apply to IRA accounts, an 

express statement would foster greater availability of educational materials to IRA 

holders. 
7

• Exception for Valuation for Reporting and Disclosure Purposes 

While we support the Department’s goal of ensuring accurate valuation of plan assets, we 

are concerned that the Proposal’s significant expansion of the definition of fiduciary 

valuation services will negatively impact plans, participants and service providers in 

ways the Department likely did not intend. In particular, we believe the Department’s 

effort to limit the scope of the provision in paragraph (c)(2)(iii) of the Proposal by 

providing an exception for valuations conducted for reporting and disclosure purposes is 

too limited. 

For example, a valuation for reporting purposes that nonetheless involves any assets “for 

which there is not a generally recognized market and serves as a basis on which a plan 

may make distributions to plan participants” would be a fiduciary valuation under the 

Proposal. The Preamble to the Proposal explains that the Department is specifically 

concerned with the valuation of company stock held by Employee Stock Ownership 

Programs (ESOPs). The Proposal “is not limited to employer securities,” however, and 

specifically includes real estate appraisals as another covered valuation service. There 

are, however, valuations of other kinds of property this broad language would capture 

that are quite different in kind from closely-held employer stock or real estate, and that 

present very different questions to plan fiduciaries. 

First, the Department should clarify that the definition of fiduciary valuation services 

does not reach to fair value pricing effected in connection with an underlying open-end 

registered investment company (mutual funds) or collective investment trust funds, which 

are designed to prevent market timing activities in the funds. These activities are used to 

achieve accurate prices that reflect the market value of all portfolio securities held in such 

funds, are provided on behalf of all fund investors and not provided for the singular 

benefit of qualified plans utilizing such funds as investment options. Given the 

potentially broad scope of the “is not limited to employer securities” positioning, we 

believe clarification that these types of valuation services are not fiduciary valuation 

services better captures the Department’s intent. 

 We also are concerned that Great-West’s group annuity insurance products and other 

insurance investment contracts likely do not qualify for the reporting and disclosure 

exception, despite the fact that the underlying investments in these contracts often are 

securities and other property for which there is a generally recognized market, because 

the insurance products themselves are not traded on a “generally recognized market.” It 

seems unlikely that the Department intended to cause insurance companies and their 

employees to become fiduciaries merely because they mechanically calculate the value of 

an insurance contract for the purpose of a participants’ minimum distribution 

requirement. Therefore, we recommend that the Department generally exempt from the 

regulation the valuation of investment products offered by insurance companies, 

including group annuity contracts, whether provided for reporting purposes or otherwise. 

As a record-keeper, we also provide information to plans and participants regarding the 

value of their accounts, including assets for which there is no “generally recognized 

market,” that may be used for distribution purposes. We believe any final regulation 
8

 

should clarify that a record-keeper or other service provider who did not actually perform 

the valuation of the property is not a fiduciary for merely “passing-through” the valuation 

information provided to it, whether passed-through for reporting purposes or otherwise. 

• Exception for Sales 

The Department correctly recognized in the Preamble that advice or recommendations 

made in connection with sales activity “ordinarily should not result in fiduciary status” in 

the Proposal. Paragraph (c)(2) of the Proposal therefore excepts a person “providing the 

advice or making the recommendation in its capacity as a purchaser or seller of a security 

or other property, or as an agent of, or appraiser for, such a purchaser or seller.” 

However, we believe certain clarifications are necessary to ensure the exception serves 

the needs of plans and participants and functions as the Department intended. 

First, we urge the Department to clarify that the sales exception applies to information 

provided in connection with sales by a service provider after its selection and throughout 

the provider’s relationship with the plan. Information related to sales is exchanged on an 

ongoing basis with the plan throughout the course of the service provider relationship as 

the plan selects and monitors its investment options and conducts other plan business. 

Sales discussions will occur, for example, when plans seek changes to their fund lineups 

or implement new design features like automatic enrollment and QDIA options months or 

even years after selecting the service provider and making the initial round of decisions 

regarding plan investments and features. The exception should clearly state that sales 

activity is excepted regardless of when during the service provider relationship it occurs. 

The Department should also clarify that, consistent with the statute and the Department’s 

long-established views regarding fiduciary status, the sales exception is unnecessary with 

respect to information provided prior to the Plan’s selection of the service provider. Such 

“pre-selection” discussions are not fiduciary in nature under either the Proposal or the 

current regulation because the prospective service provider is not providing advice for a 

fee.7

 

Second, we believe the sales exception must be redrafted because the term “adverse” 

cannot properly be used to describe the plan and service provider relationship. Financial 

service providers are not engaged in caveat emptor transactions with their clients—state 

and/or Federal laws governing the conduct of financial service providers prohibit them 

from considering only their own interests. These providers must take into account the 

needs of their clients, consistent with their legal obligations under the prevailing duty of 

care, such as the securities law standard of suitability or fiduciary obligation. As a result 

of these legal duties, a service provider cannot properly be considered “adverse” to his or 

her client. 

7

 Under ERISA §3(21)(B)(ii), a person is a fiduciary to the extent he “renders investment advice for a fee or other 

compensation...” If a service provider has not yet been selected by the plan, then the provider has no legal right to 

or expectation of a fee, and thus cannot be a fiduciary with respect to the provision of investment advice. For 

example, a detailed response to an RFP may include specific recommendations regarding the investment of plan 

assets, but the response to the RFP is not investment advice for a fee. 
9

To clarify that the service provider is not a fiduciary acting “solely in the interest” of the 

plan or participant in the sales context (which we believe was the Department’s intent), 

we recommend striking the phrase: 

 “a purchaser or seller, whose interests are adverse to the interests of the plan or its 

participants or beneficiaries, and that the person is not undertaking to provide 

impartial investment advice” 

from the text of the rule and replacing it with: 

“a purchaser or seller, who has a financial interest in the purchase or sale of the 

security or other property and who is therefore not undertaking to provide 

impartial investment advice.” 

 

• Exception for Platform Providers 

While we do not believe that offering a record-keeping platform is a fiduciary act under 

current law or under the Proposal, we support the Department’s decision to include in the 

Proposal an exception from fiduciary advice for making available an investment platform 

and for providing information related to the investment options on the platform. 

However, we are concerned that the exceptions in paragraphs (c)(2)(ii)(B) and 

(c)(2)(ii)(C) may be too narrow, as the exception does not expressly include certain 

services many platform providers, including Great-West, offer to their plan clients. Nonfiduciary record-keepers and other providers offering platforms provide valuable 

information to plan fiduciaries about the investment options available on the platform. At 

Great-West, we are concerned that the proposal as written would chill or eliminate 

beneficial services to plans, such as our diagnostic tools that assist plan fiduciaries in 

their selection and monitoring duties. In our experience, these diagnostic tools are 

especially important to small businesses, whose plan fiduciaries, may not have the time 

or resources to gather and compare the objective data our tools provide for them, and who 

might otherwise find it too complex and costly to offer 401(k) plans to their employees. 

 

Ambiguity Regarding “Individualized Needs” 

 

Paragraph (c)(2)(ii)(B) provides that a platform provider disclosing that it is not intending 

to provide impartial advice is not an investment advice fiduciary for making the platform 

available as long as it does so “without regard to the individualized needs of the plan, its 

participants or beneficiaries.” It is not clear to us what conduct the Department intends to 

exclude with this language, as it would be nearly impossible for any service-provider to 

offer a platform that does not take into account the individualized needs of the plan in 

some manner. We recommend that this language be deleted from the Proposal. 

Great-West offers three different platforms, each of which has a different menu of 

investment options, different features, and different pricing structures. In selecting one of 

our platforms for use by the plan, and in populating the plan with investment options 

from the platform, both the service provider and the plan fiduciary must consider the 
10

individualized needs of the plan. Plan fiduciaries often ask extensive questions about the 

platforms, any required funds, any discretionary funds, share classes, fees, alternative fee 

arrangements, investment options and other relevant characteristics of the platforms and 

the investment options in order to carry out their fiduciary duty to prudently select the 

service provider and investments. Broker-dealers and others working with the plan 

fiduciaries must be able to answer these questions and offer information related to each 

plan’s individualized evaluation of Great-West’s products and services. Some of GreatWest’s platforms offer extensive customization options for plans, and other platforms 

offer fewer options, all of which are intended to provide to plan fiduciaries the level of 

services and features they deem most appropriate for their individual plans. Offering 

products and services that take into account the plans’ needs should not subject recordkeepers and other platform operators to fiduciary liability for providing investment 

advice, and this language should be deleted from the Proposal. 

Diagnostic Tools and “General Financial Information” 

Paragraph (c)(2)(ii)(C) states that “In connection with the activities described in 

paragraph (c)(2)(ii)(B), the provision of general financial information and data to assist a 

plan fiduciary's selection or monitoring of such securities or other property as plan 

investment alternatives” is not fiduciary investment advice as long as the plan discloses 

that it is not intending to provide impartial advice. However, it is not clear whether 

compiling comparative financial data about the investment options on a platform 

constitutes “general financial information.” The Proposal should specifically permit 

diagnostic tools that provide comparisons between options based on objective data, as 

this information is extremely valuable to plan fiduciaries attempting to monitor the 

performance of plan investment options and making appropriate changes to the plan’s 

investment options. 

Great-West makes available to its plan clients financial tools that are used by plans to 

assess how their options are performing relative to the other options available on the 

platform. We do not provide investment advice through these tools—the tools simply 

make comparisons among funds based on objective data and indicate through a simple 

color-coded system whether the funds are top, middle or low performers. These tools do 

not tell plans which funds to select, but merely provide the objective performance 

information in a comparative format for plan fiduciaries to use in making investment 

decisions. Providing plan fiduciaries with objective information regarding common fund 

metrics, such as comparative past performance or fee data, should not be fiduciary 

advice. Unless this is clarified, platform providers will have to reduce or eliminate the 

tools they offer to the detriment of plans and participants. 

As discussed above, the term “management” in paragraph (c)(1)(A)(3) is not defined in 

the Proposal, and thus it is not clear whether diagnostic tools utilizing objective 

information could be construed as advice under this paragraph. It is also not clear 

whether such tools are “general financial information” within the exception in paragraph 

(c)(2)(ii)(C). Given the value this information provides to plan fiduciaries in selecting 

and monitoring investments, and given that the tools do not recommend but merely 

provide general rankings of the investment options based on objective criteria, we believe 
11

that the Proposal should specifically permit such diagnostic tools by including them in 

the exception for platform services. More broadly, we believe such tools should also be 

deemed educational material in plan-level guidance analogous to IB 96-1. 

Mapping and Conversion 

 

When a plan changes record-keeping platforms, it has several options for transferring 

funds from the previous investments to the new investments available on the new 

platform. Whether plans convert assets to cash for reinvestment or “map” the 

investments from the old options into new options most closely resembling the previous 

options, the platform operator typically assists the plan with this process, answering 

questions and providing insight. Offering assistance and insight to plan clients who 

retain the sole authority to make all fiduciary decisions associated with mapping and 

conversion should not make the platform operator a fiduciary investment advisor. We 

recommend that the Proposal specifically except information provided to the plan by the 

platform operator or its agents regarding the mapping and conversion process. For 

example, answering questions about which platform investment options have similar 

characteristics to the old plan investment options is not fiduciary advice, but should be 

viewed as the kind of non-fiduciary general financial information contemplated by the 

Proposal. 

Investment Option Removal and Replacement 

The Department’s guidance regarding the fiduciary status of platform operators in Aetna 

Advisory Opinion 97-16A (AO 97-16A) lays out a process by which such fund 

replacements are decisions made by the investing plan fiduciaries rather than the platform 

service providers. This guidance is essential to the current administration of recordkeeping platforms. While the Proposal alludes to AO 97-16A in a footnote, the Proposal 

should expressly clarify that removing a fund and replacing that fund on the platform is 

not fiduciary advice if the requirements of the AO 97-16A are followed. We are 

concerned that the current Proposal could be construed, for example, to view the 

platform’s replacement of an underperforming fund with a similar but better performing 

fund as fiduciary investment advice. We believe that referencing AO 97-16A, and 

clarifying its application to fiduciary investment advice under ERISA 3(21)(A)(ii), will 

ensure that fund removal and replacement can continue as non-fiduciary business 

decisions by platform operators. 

Distribution Information:

In the Preamble to the Proposal, the Department requested comments on issues related to 

its determination in Deseret Advisory Opinion 2005-23A (“AO 05-23A”) that advice 

regarding distribution options was not fiduciary advice. We believe the Department’s 

position in AO 05-23A was correct, and there is no need to revisit this narrow issue with 

further guidance. 

If, however, the Department plans to revisit this issue, we strongly urge that this matter 

be considered as a separate project from the Proposal. The issues presented are 
12

extremely complex, with significant ramifications on the availability and cost of financial 

services to participants inside plans and to individual investors in individual retirement 

accounts (“IRAs”), Internal Revenue Code (“Code”) section 457 plans and other nonERISA retirement savings vehicles. 

First, it is important to note that the activities of financial advisors are regulated by the 

Federal government, by the states, or by both. While the specific legal duties of care, 

remedies for loss due to breach of duty, penalties for misconduct, and licensing 

requirements of financial service providers vary depending on the type of provider, 

financial advisors are subject to oversight and regulation that protect the interests of their 

customers, whether plan participants or individual investors. Unilateral action by the 

Department to insert ERISA fiduciary concerns into advice regarding distribution options 

would disrupt this balanced system of oversight and regulation. For example, the 

Securities and Exchange Commission (SEC), which has regulatory authority over many 

of the financial service providers who contact participants regarding distribution options, 

is currently engaged in a review of the standards that such providers must abide by when 

providing financial services to their clients.8

 For this reason, we urge the Department to 

take no action in this area until the SEC has completed its work. 

Second, the ramifications of imposing fiduciary status on any adviser who discusses 

distributions would be far-reaching, and could affect participants in plans well outside of 

ERISA’s coverage. ERISA fiduciaries are subject to fiduciary liability and the prohibited 

transaction rules when providing advice to participants. If this includes all service 

providers who discuss distribution options, any financial adviser interacting with a 401(k) 

participant could become a fiduciary (with the attendant costs of fiduciary insurance and 

possibly changing its contractual arrangements to comply with the prohibited transaction 

rules). Such higher costs will result in fewer providers available to help participants 

make important decisions about their retirement accounts, making it harder and more 

expensive for participants to “roll over” their 401(k)s or IRAs and undercutting the 

important public policy goal of portability. 

We urge the Department to consider any changes to the current Advisory Opinion 

separately from the Proposal, due to the complexity of this issue and its significance to 

participants. Further, we believe the Department’s goal should be to make it easier for 

participants taking distributions to receive information or advice about their options, not 

more difficult. For example, we recommend the Department expand IB 96-1 to allow the 

provision of more specific information relating to distribution issues rather than expand 

the number of providers deemed investment advice fiduciaries. 

Application to IRAs:

The Department of Labor has interpretive authority over the prohibited transaction 

provisions both in Title I of ERISA and in section 4975 of the Code. In the Proposal, the 

Department specifically used this authority to ensure that IRAs under section 408(a) of 

 

8

 See “Study on Investment Advisors and Broker Dealers,” SEC Staff Study under Dodd-Frank Act Section 913, 

January 2011. 
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the Code would be subject to the proposed rule, even though such accounts are not 

ERISA plans. 

In the past, DOL has used its interpretive authority to recognize the inherent differences 

between IRAs and ERISA plans, and excluded IRAs from certain ERISA requirements. 

Most recently, in the Interim Final regulation implementing the new disclosure 

requirements of the prohibited transaction exemption for reasonable services in ERISA 

section 408(b)(2), the Department reasoned that it: 

 “does not believe that IRAs should be subject to the final rule, which is designed 

with fiduciaries of employee benefit plans in mind ... moreover, IRAs generally 

are marketed alongside other personal investment vehicles. Imposing the 

regulation's disclosure regime on IRAs could increase the costs associated with 

IRAs relative to similar vehicles that are not covered by the regulation. Therefore, 

although the final rule cross references the parallel provisions of section 4975 of 

the Code, paragraph (c)(1)(ii) provides explicitly that IRAs and certain other 

accounts and plans are not covered plans for purposes of the rule.”9

For similar reasons, we urge the Department to exclude IRAs from the requirements of 

the Proposal. The potential cost increase for IRAs caused by the Proposal would not 

apply to similar retirement vehicles not covered by the regulation, such as Code section 

457 plans and other investment vehicles. Great-West serves a significant number of 457 

plans that would not be subject to this Proposal. Yet participants wishing to rollover their 

Code section 457 plans to IRAs would suddenly become subject to different and 

significantly more burdensome and costly rules. As the Department noted in the section 

408(b)(2) Interim Final Regulation, it is not in the best interests of the retirement system 

to make it more difficult for service providers to operate cost-effectively with respect to 

the different plan designs. 

We note that the IRA marketplace is even larger than the ERISA defined-contribution 

marketplace, and we express concern that the Proposal does not appear to provide any 

meaningful economic analysis of the impact of extending the Proposal to IRAs. Further, 

given current Federal budgetary constraints, we think it is a real concern that the 

Department would not have the resources necessary to adequately oversee and enforce 

the application of the Proposal to the universe of IRA holders and IRA providers. The 

Department is already less-well funded than many similar agencies when viewed in light 

of the size of its regulatory and enforcement responsibility overseeing private sector 

employee benefit plans. 

Though the prohibited transaction rules already apply to IRAs, the broad scope of the 

new rule likely would result in a significant expansion of the number of IRA providers 

deemed to be fiduciaries subject to the application of these rules, many for this first time. 

The education and outreach necessary to assist IRA providers in understanding and 

9 75 CFR 41603. 
complying with ERISA fiduciary and prohibited transaction requirements would likely be 

considerable. 

Conclusion:

Thank you for the opportunity to comment on the Proposal. We look forward to working 

with you to improve the retirement security of America’s workers, and we would be 

happy to answer any additional questions you may have. Please feel free to call me at 

303-737-3086. 

Sincerely, 

Charles P. Nelson 

 

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