From: BAILEY, LISA [mailto:LISABAILEY2@allstate.com] 

Sent: Friday, March 05, 2010 1:00 PM 

To: EBSA, E-ORI - EBSA 

Subject: Proposed rules on 401k's and IRA's

To the Labor Department,

 

I would like to document my comments on the attached article involving the proposed rules.

 

1) Please understand that not all of us are another Bernie Madoff. Some of us are honest, 

hardworking people who just want to make a difference. As representatives, every one of us has 

been given a bad name and been grouped together due to those that have not had their clients 

best interests in mind and worked accordingly. It is already an uphill battle to prove that there 

are representatives out there with integrity who can be trusted to help clients manage their 

money. By passing these laws, it gives the impression that not any one representative can ever 

be trusted to do what is right for their client.

 

2) Under the new proposed regulation, the adviser cannot give his personal advice in any 

circumstance." Please explain to me as well as any other registered representatives how we 

are supposed to do our job? Just because we are making a recommendation - based off of a 

proper asset allocation for the client's risk tolerance, does not mean it is right or wrong. It is an 

opinion, or recommendation in the eyes of the educated professional who does this job every 

day. The client at any time can say no. No one is forcing them to comply with that 

representative. No one forced those who invested with Bernie Madoff to give him their money 

either. Not to say I am defending Mr. Madoff. However, there is a level of responsibility on both 

the representative making the recommendation as well as the client in choosing that 

recommendation and even that representative. By restricting the representatives you are sending 

the message that the client has absolutely no responsibility in the decisions that he/she has made 

in the past. This is a slippery path. To follow that path, who is to say that if one should commit a 

violent crime, why should they be held responsible for that decision to commit the crime? Wasn't 

is the sole responsibility of the police to prevent it from happening?

 

Furthermore, to enact these laws would put the existing workforce in this field basically into 

unemployment. No advice allowed to be given = bad management = no clients = no job.

Aren't you supposed to be helping to decrease the unemployment rate??

 

Thank you for your time.

 

Sincerely,

Lisa A Bailey

Licensed Account Specialist

AFS, LLC

330 726 1696 Ph

330 726 9688 Fax

lisabailey2@allstate.com 

 
New rules on 401(k)s, IRAs roil advisers Robert Powell - MarketWatch

http://www.marketwatch.com/story/new-rules-on-401ks-iras-roil-advisers-2010-03-02?pagenumber=2[3/5/2010 12:33:41 PM]

ROBERT POWELL

March 2, 2010, 12:01 a.m. EST · Recommend · Post: 

Advice you can count on?

Financial advisers split on whether proposed 401(k), IRA

rules will help or hurt investors

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"The administration gets that people are upset about the conflicts rife within the industry

and that, at least in this arena, is trying to raise the bar for good practices," Lynch said.

In the end, Lynch and others think it's possible that plan sponsors -- the companies that

sponsor 401(k) firms as opposed to plan providers -- may decide to work only with

advisers who are not associated with selling products in any way.

Wohlner and others also said advisers to 401(k) participants should disclose all fees.

"Advisers and their affiliates should be required to disclose all fees and forms of

compensation from both giving advice and any other related revenues they make off of

the plan," he said. "Full and complete disclosure with no loopholes or exceptions."

New rules on using computer models

Of course, some of the details are devilish and confusing. Take the rule that lets

advisers use computer models to give investment advice under certain conditions.

The proposal tightens up the rules on such advice, said C. Frederick Reish, an attorney

with Reish & Reicher.

"Under the withdrawn regulation, if an adviser gave advice to a participant, but the

participant asked for more advice, the adviser could give his advice, that is, noncomputer model advice. Under the new proposed regulation, the adviser cannot give his

personal advice in any circumstance."

The rule also says that if an adviser uses a computer model, it needs to be certified as

objective and unbiased. But advisers aren't clear on what that means and how it will be

enforced.

What's past is past

Likewise, advisers are confused about a proposed provision that disallows the use of

historical data.

"Clearly historical data should not be the criteria for fund selection in and of itself," said

Wohlner. "But ignoring it totally, or any other aspect of fund data such as expenses,

relative risk, risk-adjusted performance, and the like is a mistake. I love index funds, but

they are not the right answer in all cases."

Campbell and others agree. "I am very concerned that the Labor Department is

considering defining 'generally accepted investment theories' and mandating or

prohibiting investment practices," Campbell said.

+12 Votes (12 Up / 0 Down)

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New rules on 401(k)s, IRAs roil advisers Robert Powell - MarketWatch

http://www.marketwatch.com/story/new-rules-on-401ks-iras-roil-advisers-2010-03-02?pagenumber=2[3/5/2010 12:33:41 PM]

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"Debates over active or passive management, whether to consider past investment

performance in the model, and similar matters should be decided by fiduciaries, not the

government," he said. "Such unprecedented regulatory micromanagement of fiduciary

decision-making would be dangerous, and not in the best interests of participants."

Said Johnston: "I find it frightening that the Labor Department ... took upon themselves to

consider and question the value of prior performance before releasing their proposed

regulations."

Some say this provision opens up a Pandora's box of problems.

"The proposal is looking to hide past performance of individual funds, opening the door

for every failed scheme and Madoff look-alike to get into IRAs and 401(k)s as long as

the expenses are low," Harvey said. "This is crazy."

Confusion about IRAs

Another big area of debate and confusion concerns what advisers can and can't do

when giving investment advice to IRA owners.

"Of particular importance is the impact the regulations are going to have on brokers who

advise IRA rollovers, which is just about any broker who is serving wealth management

clients," Trone said. "It seems that a vast majority of brokers will now have to become

dually registered if they are going to advise either qualified pension plans or IRA

rollovers." Dually registered advisers are registered both with the Financial Industry

Regulatory Authority and the Securities and Exchange Commission.

Are new rules needed?

Meanwhile, there are those who suggest that there's no or little need for new rules.

According to David Wray, head of the Profit Sharing/401(k) Council of America, there's a

model, often called the SunAmerica model, that has been widely adopted and which is

available today to more than 20 million participants. That model lets brokers give advice

to 401(k) participants under certain conditions.

To view the Notice of Proposed Rulemaking on Investment Advice and the final rule on

multi-employer disclosure, visit this site.

To view the White House Middle Class Task Force Report, the background for the Labor

Department's proposed rules, visit this site.

By the way, the Labor Department is seeking comments on its proposed rules. Written

comments on the investment advice proposal should be addressed to the Office of

Regulations and Interpretation, Employee Benefits Security Administration, Room N5665, U.S. Department of Labor, 200 Constitution Ave. NW, Washington, D.C. 20210,

Attn: 2010 Investment Advice Proposed Rule. The public also may submit comments

electronically by email e-ORI@dol.gov or through the federal e-rulemaking portal at this

site, http://www.regulations.gov.

Robert Powell has been a journalist covering personal-finance issues for more than 20

years, writing and editing for publications such as The Wall Street Journal, the Financial

Times, and Mutual Fund Market News. Powell is the editor of Retirement Weekly. Learn

more about Retirement Weekly at this Web site .

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New rules on 401(k)s, IRAs roil advisers Robert Powell - MarketWatch

http://www.marketwatch.com/story/new-rules-on-401ks-iras-roil-advisers-2010-03-02?pagenumber=2[3/5/2010 12:33:41 PM]

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New rules on 401(k)s, IRAs roil advisers Robert Powell - MarketWatch

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