THE WAGNER LAW GROUP

A PROFESSIONAL CORPORATION
99 SUMMER STREET, 13TM FLOOR + BOSTON, MA 02110 (617) 357-5200

FACSIMILE, E-MAIL WEBSITES,
(617) 387-5250 marcia @ wagnerlawgroup.com www.erisa-lawyers.com
www.wagnerlawgroup.com

May 5, 2010

By E-mail: e-ORI@dol.gov

Office of Regulations and Interpretations,
Employee Benefits Security Administration,

Room N-5655

USS. Department of Labor

200 Constitution Avenue, N.W.

Washington, DC 20210.

ATTN: 2010 Investment Advice Proposed Rule
To Whom It May Concern:

The proposed investment advice regulations! address only conflicted investment advice
provided to plan participants. The regulations do not address conflicted investment advice
provided to plan sponsors. We urge the U.S. Department of Labor (“DOL”) to issue a class
exemption in connection with the proposed regulations that would allow fiduciary advisers to
provide similarly conflicted investment advice to plan sponsors under a fee-leveling
arrangement.

Conflicted Advice Definition. For purposes of this comment letter, we define
“conflicted investment advice” in the same manner that the DOL has described it in the preamble
to the proposed regulations.” In order words, conflicted investment advice means that an entity
(e.g., the investment adviser for a mutual fund) affiliated with a fiduciary adviser (¢.g., a
separately incorporated registered investment adviser owned by the mutual fund’s investment
adviser) could receive fees that vary based on the investments selected by the plan sponsor.
However, the fiduciary adviser (and its employees) advising the plan sponsor could not receive
variable fees.

Conditions for Proposed Class Exemption. The terms and requirements for a proposed
class exemption could be virtually identical to those that apply to fee-leveling arrangements in
the proposed regulations. Of course, the important difference is that the proposed class
exemption would enable fiduciary advisers to provide investment advice to plan sponsors.

' “Investment Advice--Participants and Beneficiaries,” published at 75 Fed. Reg. 9360 (Mar. 2, 2010).

? See 75 Fed. Reg, 9360, 9361 (“Thus, even though an affiliate of a fiduciary adviser may receive fees that vary
depending on investment options selected, any provision of financial or economic incentives by an affiliate (or any
other party) to a fiduciary adviser or any individual employed by such fiduciary adviser (e.g., an employee providing
advice on its behalf or an individual responsible for supervising such an employee) to favor certain investments
would be impermissible.”)



U.S. Department of Labor
May 5, 2010
Page 2

Rationale for Proposed Class Exemption. Plan sponsors — particularly for small plans
— need investment advice at competitive prices as much, if not more so, than plan participants.
Yet, under the proposed regulations, fiduciary advisers could provide conflicted investment
advice only to plan participants, not plan sponsors.

From a public policy point of view, the distinction between plan sponsors and plan
participants in the ERISA investment advice marketplace is difficult to justify. If the safeguards
in the proposed regulations are sufficient to protect plan participants from conflicted investment
advice, then the same safeguards in the class exemption should similarly be sufficient to protect
plan sponsors.

eR Kk ROR OK OK

Thank your for your attention to and consideration of this comment. If you have
questions, please do not hesitate to contact me.

Sincerely,
font 0, Hartnnen,| —
Russell A. Gaudreau, Jr.
RAG/krk

ce: Dennis T. Blair, Esq.
Marcia S. Wagner, Esq.

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