Docket: EBSA-2010-0050 

Definition of the Term ‘‘Fiduciary’’ 

Comment On: EBSA-2010-0050-0001 

Definition of the Term Fiduciary 

Document: EBSA-2010-0050-DRAFT-0001 

Comment on FR Doc # 2010-26236 

Submitter Information 

Name: Anthony Agbay 

Address: 

1450 W. Long Lake Road 

Suite 150 

Troy, MI, 48098 

Email: anthony@agbaygroup.com 

Phone: 248-502-0806 

Organization: The Agbay Group - A Division of Leonard & Company 

General Comment 

See attached file(s) 

Attachments 

PUBLIC SUBMISSION 

As of: November 03, 2010 

Received: October 26, 2010 

Status: Pending_Post 

Tracking No. 80b7768b 

Comments Due: January 20, 2011

Submission Type: Web

EBSA-2010-0050-DRAFT-0001.1: Comment on FR Doc # 2010-26236

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The two chief goals of the definition of a fiduciary are to protect the interests of the plan 

sponsors and participants. We’d like to address the ladder point pertaining to the 

participants and, more specifically, the distribution advice made by many plan advisors. 

The ultimate objective of retirement plans is to provide sufficient income replacement for 

the participants at retirement. However, all too often this goal is undermined by the 

needs and conflicting objectives of the plan advisors in the distribution phase. 

In most instances, participants that are advised to distribute their assets from employer 

sponsored plans to individual accounts have three considerable disadvantages: 

1. the participants lose the law of large numbers and the institutional pricing 

afforded to corporate plans - the participants now receive more expensive “retail” 

pricing instead of the institutional rates including higher commissions, higher 

internal costs and transaction fees 

2. corporate subsidized plan level expenses are lost 

3. the new rule under ERISA 408(b)(2) mandating the full disclosure of retirement 

plan advisors and vendors’ compensation is not applicable. 

We believe the solution is to require complete disclosure and comparisons of the costs 

of the current plan including who bears the burden of those expenses (the plan and/or 

participants) with the expenses and commissions associated with the recommended 

distribution alternative. The illustration should include first year costs and any longevity 

expenses associated with such recommendations. 

Moreover, the disclosure should be required not only by the advisor on the plan but by 

others within the same broker dealer or referrals made by the advisor to other 

professionals who receive direct or indirect compensation. This will help alleviate 

internal and external referral programs aimed at mining the assets of the participants 

including but not limited to insurance, estate planning (wills and trusts), etc. 

The aforementioned disclosures and comparisons should be required to be filed with 

the plan sponsor (at the request of the plan sponsor) with safe harbor protection given 

to plan sponsors for distribution recommendations made by the advisors. This will 

provide the plan sponsor with the ability but not the responsibility or requirement to 

review such recommendations to determine if the advice and counsel of the advisor is in 

the participants’ best interest. 

This transparency will help ensure the participants receive a true cost/benefit analysis of 

the current and recommended investment strategies. If the distribution result is higher 

costs, it may be well worth the tradeoff if the circumstances are appropriate. For 

example, if a participant has the opportunity to receive greater diversification, broader 

investment choices or guaranteed income for life or death benefits, it may be a prudent 

recommendation and decision. However, the advisor will have to disclose if there is, for 

example, an upfront annuity commission of 10% or a mutual fund sales load of 5.50% 

compared to a commission-free environment afforded to most corporate retirement 

plans. 
With an industry plagued by conflicts or perceived conflicts of interest, such 

transparency will benefit the plan participants and the industry as a whole. It will 

ultimately better align the needs of the participants with the distribution 

recommendations of the advisor.