Via Electronic Delivery

July 9, 2012 

The Honorable Phyllis C. Borzi 

Assistant Secretary 

Employee Benefits Security Administration 

U.S. Department of Labor 

200 Constitution Avenue, N.W. 

Washington, DC 20210 

Re: Target Date Disclosure [RIN 1210-AB38], 77 Fed. Reg. 30928 (May 24, 2012) 

Dear Assistant Secretary Borzi: 

 The Financial Services Roundtable (the “Roundtable”)1 respectfully submits this 

response to the Department of Labor’s (the “Department”) request for public comment on 

proposals to enhance disclosure concerning target date or similar investments.2

 In addition to the 

concerns addressed in this letter, the Roundtable continues to support the views expressed in its 

comment letter dated January 14, 2011, submitted in response to the Department’s initial Target 

Date Disclosure proposal.3

On May 24, 2012, the Department re-opened the comment period to afford the public an 

opportunity to comment on a study of individual investors’ understanding of target date funds 

and related marketing materials that was prepared for the Securities and Exchange Commission 

(the “Commission”).4

 The Department noted the relevance of the study to its proposed 

                                                             1

 The Financial Services Roundtable represents 100 of the largest integrated financial services 

companies providing banking, insurance, and investment products and services to the American consumer. Member 

companies participate through the Chief Executive Officer and other senior executives nominated by the CEO. 

Roundtable member companies provide fuel for America’s economic engine, accounting directly for $85.5 trillion in 

managed assets, $965 billion in revenue, and 2.3 million jobs. 2

 See Target Date Disclosure, Department of Labor [RIN 1210-AB38], 75 Fed. Reg. 73987 (Nov. 

30, 2010), proposing to amend the Department’s qualified default investment alternative regulation, available at 

http://www.gpo.gov/fdsys/pkg/FR-2010-11-30/pdf/2010-29509.pdf. 3

   See Comments of The Financial Services Roundtable, Target Date Disclosure (Jan. 14, 2011), 

available at

http://www.fsround.org/fsr/policy_issues/regulatory/pdfs/pdfs11/RoundtableCommentonTargetDateDisclosure1.13.

11.pdf. 4

 See SIEGEL & GALE LLC, Investor Testing of Target Date Retirement Fund Comprehension and 

Communications (Feb. 15, 2012), available at http://www.sec.gov/comments/s7-12-10/s71210.shtml. 
2

rulemaking, and invited parties that had submitted comments on the Commission’s target date 

fund proposals5

 to submit (or reference) those comments for inclusion in the Department’s public 

record. Accordingly, the Roundtable hereby submits its comment letter on the Commission’s 

target date fund proposals for inclusion in the Department’s public record.6

 The Roundtable supports efforts by regulators to ensure that retail investors receive 

material information that enables them to evaluate and compare target date funds and other 

investment vehicles that now exist in the retirement markets. We commend the Department and 

the Commission for their efforts to coordinate their rulemaking initiatives “to avoid the potential 

cost and confusion (on the part of plan sponsors, participants or beneficiaries) that could result if 

the two agencies were to establish inconsistent disclosure requirements.”7

 We encourage 

regulators to continue to work together to develop and establish a disclosure framework that 

provides retail investors with the type of clear, concise, and meaningful information needed in 

the most cost-effective manner possible. 

We note that the effective date for amendments proposed by the Department could occur 

at a different time period from the effective date for amendments proposed by the Commission. 

The Roundtable is concerned that the transition to two independent sets of rules may result in 

investor confusion because investors would receive multiple disclosure documents that 

seemingly cover the same topics. Multiple, serially-effective regulatory disclosure requirements 

also would unnecessarily increase the plan’s operational compliance costs without providing 

offsetting benefits to plan participants and beneficiaries. 

The Roundtable believes that coordinating the effective dates for new disclosure 

requirements adopted by the Department and the Commission will enhance plan participants’ 

and beneficiaries’ understanding of the information and greatly reduce implementation costs. 

We recommend that the compliance dates for the new rules take place concurrently and at the 

end of the calendar quarter. This would enable funds to implement the changes in the normal 

cycle of updating marketing material, which would significantly reduce the compliance costs. 

The Roundtable further recommends that plan sponsors have a minimum 90-day 

transition period to implement the new requirements, as our members will be required to upgrade 

their systems to comply with the proposed target date disclosures. In this regard, we note that 

some of our member companies are already providing participant-level disclosure notices on 

behalf of their recordkeeping clients, in advance of the July 1, 2012 effective date for compliance 

                                                             5

   See Investment Company Advertising: Target Date Retirement Fund Names and Marketing, 

Securities Act Release No. 9309, 77 Fed. Reg. 20749 (Apr. 6, 2012), available at 

http://www.gpo.gov/fdsys/pkg/FR-2012-04-06/pdf/2012-8348.pdf. 6

 See Comments of The Financial Services Roundtable, Investment Company Advertising: Target 

Date Retirement Fund Names and Marketing (May 21, 2012), available at

http://www.fsround.org/fsr/policy_issues/regulatory/pdfs/pdfs12/2012-Comments-on-Target-Date-Retirement-FundNames-and-Marketing.pdf. 7

   See Target Date Disclosure, Department of Labor [RIN 1210-AB38], 77 Fed. Reg. 30928, 30929 

(May, 24, 2012), proposing to amend the Department’s qualified default investment alternative regulation, available 

at http://webapps.dol.gov/FederalRegister/PdfDisplay.aspx?DocId=26099.   
3

with the new section 408(b)(2) disclosure obligations.8 These new participant-level disclosure 

obligations required significant systems upgrades over an extended time period. 

 The Roundtable appreciates the opportunity to submit comments on the Department’s 

target date disclosure proposals. If it would be helpful to discuss the Roundtable’s specific 

comments or general views on this issue, please contact me at Rich@fsround.org or Brian Tate at 

Brian@fsround.org. 

 

 Sincerely yours, 

 

 Richard M. Whiting 

 Executive Director and General Counsel 

 The Financial Services Roundtable 

ENCLOSURE 

With a copy to: 

The Honorable Michael L. Davis, Deputy Assistant Secretary 

Kristen Zarenko, Office of Regulations and Interpretations 

                                                             8

 See Reasonable Contract or Arrangement Under Section 408(b)(2) – Fee Disclosure, Department 

of Labor [RIN 1210-AB08], 77 Fed. Reg. 5632 (Feb. 3, 2012), available at 

https://webapps.dol.gov/federalregister/PdfDisplay.aspx?DocId=25781. 
Via Electronic Delivery

May 21, 2012

Elizabeth M. Murphy

Secretary

Securities and Exchange Commission

100 F Street NE

Washington, DC 20549

Re: Investment Company Advertising: Target Date Retirement Fund Names and 

Marketing, Securities Act Release No. 9126 [File No. S7-12-10] (June 23, 2010)

Dear Ms. Murphy:

The Financial Services Roundtable (the “Roundtable”)1 respectfully submits this letter in 

response to the Securities and Exchange Commission’s (the “Commission”) request for comments on 

proposed amendments to rules 156 and 482 under the Securities Act of 1933 and rule 34b-1 under the 

Investment Company Act of 1940 governing marketing materials for target date retirement funds 

(“Target Date Funds”). 2 The Commission engaged a consultant to study individual investors’ 

understanding of Target Date Funds and related marketing materials.3 On April 6, 2012, the 

Commission re-opened the comment period to afford the public an opportunity to comment on the 

proposed amendments and the study.

4

I. Executive Summary

In light of concerns about potential investor misunderstanding, the Commission proposed the 

following changes to marketing materials used for Target Date Funds: (1) where a fund’s name includes 

a target date, disclose the asset allocation at the target date immediately adjacent to the first use of the 

 1 The Financial Services Roundtable represents 100 of the largest integrated financial services companies 

providing banking, insurance, and investment products and services to the American consumer. Member companies 

participate through the Chief Executive Officer and other senior executives nominated by the CEO. Roundtable member 

companies provide fuel for America’s economic engine, accounting directly for $85.5 trillion in managed assets, $965 billion 

in revenue, and 2.3 million jobs. 2 75 Fed. Reg. 35,920 (June 23, 2010) (“Proposing Release”), available at

http://sec.gov/rules/proposed/2010/33-9126fr.pdf. 3 See SIEGEL & GALE LLC, Investor Testing of Target Date Retirement Fund Comprehension and 

Communications (Feb. 15, 2012), available at http://www.sec.gov/comments/s7-12-10/s71210.shtml. The study also 

included questions that tested the impact of disclosures that would be required by the proposed amendments. 4 See Investment Company Advertising: Target Date Retirement Fund Names and Marketing, Securities Act 

Release No. 9309 [77 Fed. Reg. 20749 (Apr. 6, 2012)], available at http://www.gpo.gov/fdsys/pkg/FR-2012-04-06/pdf/2012-

8348.pdf. 
2

fund’s name; (2) include a table, chart, or graph depicting the fund’s asset allocation over time and a 

statement disclosing the fund’s final asset allocation; and (3) include a statement that: (a) the fund 

should not be selected based solely on age or retirement date; (b) the fund is not a guaranteed 

investment; and (c) stated asset allocations may be subject to change.5

 The Commission also proposed 

to provide further guidance for investment companies (including Target Date Funds) concerning 

statements in marketing materials that could be deemed misleading.6 

The Roundtable supports efforts by regulators to ensure that retail investors receive material 

information that enables investors to evaluate and compare Target Date Funds and other investment 

vehicles that now exist in the retirement markets. We also encourage regulators to work together to 

develop and establish a disclosure framework (including interpretative guidance) that provides retail 

investors with the type of clear, concise, and meaningful information that they need in the most costeffective manner possible. 7 Absent increased collaboration among regulators, new investor disclosures

likely would result in greater investor confusion and less effective disclosure, notwithstanding the 

substantial expense likely to be incurred in developing and implementing such disclosures.

In summary, the Roundtable’s comments are as follows:

 The Roundtable supports the use of a glide path to illustrate a Target Date Fund’s asset 

allocation over the life of the fund.

 The Roundtable agrees with the Commission that specific Target Date Fund prospectus

disclosure items are unnecessary. 

 Rule 156 already addresses the obligation to provide full and fair disclosure of material 

information in sales literature. Further rule amendments are not necessary to address the 

potential for undue focus on particular factors (e.g., “age” in a Target Date Fund) or 

representations (e.g., the ease of investment) in sales literature.

 Target Date Funds should have a minimum 90-day transition period to implement the 

new requirements. Further, the compliance dates for the new rules should take place 

concurrently and at the end of the calendar quarter.

II. Enhanced Target Date Fund Disclosures

The Roundtable supports initiatives to facilitate and enhance the timing, manner, method, format 

and scope of disclosures to retail investors. In determining the content of any required disclosure, the 

Roundtable believes that regulators should take care to ensure that any new requirements do not cause 

inadvertent harm to investors. More disclosure does not necessarily mean “better” disclosure. 

Specifically, the Roundtable believes that there is a risk that harm may occur when regulators create 

disclosure requirements that are confusing to investors, inconsistent with other regulatory requirements, 

provide information that is duplicative or unneeded, or unnecessarily increase the cost of providing 

services to investors.

 5 See Proposed rule 482(b)(5) under the Securities Act and proposed rule 34b-1(c) under the Company Act. 6 See Proposed rule 156(b)(4) under the Securities Act. 7 Joint agency coordination also would be consistent with President Barack Obama’s directive that agencies 

promote “coordination, simplification, and harmonization.” See Executive Order 13563, “Improving Regulation and 

Regulatory Review” (Jan. 18, 2011). More recently, the Office of Management and Budget directed agencies to consider the 

“cumulative effects of new and existing rules and to identify opportunities to harmonize and streamline multiple rules.” See

“Cumulative Effects of Regulations,” (Mar. 20, 2012), at 1, available at 

http://www.whitehouse.gov/sites/default/files/omb/assets/inforeg/cumulative-effects-guidance.pdf. 
3

A Glide Path Illustration Could Aid Investors’ Understanding of Asset Allocation

As proposed, Target Date Fund marketing materials must include a table, chart, or graph clearly 

depicting the percentage allocations of the fund among types of investments at periodic intervals over 

the life of the fund (“glide path”). The Commission noted that Target Date Fund prospectuses generally 

include glide path disclosures under existing regulatory requirements.8

 The Roundtable supports the use 

of a glide path to illustrate a Target Date Fund’s asset allocation (e.g., at the target date and the landing 

point), because it could aid investors’ understanding of the fund’s asset allocation over time. 

Specific Target Date Fund Prospectus Disclosure Items Are Unnecessary

Although it did not propose amendments to prospectus disclosure items, the Commission asked 

whether it should amend Form N-1A under the Securities Act9 to provide specific requirements for 

Target Date Funds.10 Investment companies already are required to disclose material information

(including risks, investment objectives, and investment strategies) in the statutory prospectus. We 

further note that the Commission’s staff determined that Target Date Fund prospectuses generally 

provide disclosures specific to Target Date Funds, including any flexibility retained by the investment 

adviser to deviate from the glide path and the specific risks associated with investments in Target Date 

Funds (including risk of loss and absence of investment guarantees).11 Accordingly, we do not believe 

that additional prospectus disclosure items specifically for Target Date Funds are necessary. 

III. Interpretative Guidance Concerning Sales Literature

 

Full and fair disclosure of material information is the foundation of federal regulation of 

securities offerings.12 Sales literature that contains an untrue statement or omission of a material fact is

materially misleading.13 Rule 156 provides guidance concerning information in sales literature that 

could be materially misleading for purposes of the anti-fraud provisions of federal securities law.14 Rule 

156 further provides that whether any particular statement is misleading would depend on an evaluation 

of the context in which the statement is made.

15

Under the proposed amendment to rule 156, it could be misleading to suggest that investment 

company securities are an appropriate investment based on a single factor (such as age or tax status) or 

certain representations about the “simplicity” of the investment plan, or that the plan “requires little or 

no monitoring by the investor.” The proposed guidance would apply to all investment companies.

 8 See Proposing Release, 75 Fed. Reg. at 35935. 9 17 C.F.R. § 239.15A. 10 See Proposing Release, 75 Fed. Reg.at 35935. 11 Id. 12 Securities Act of 1933, Pub. Law No. 73-22, ch. 38, 48 Stat. 74 (codified as amended at 15 U.S.C. § 77a–

zzz (2010)) (adopting the Securities Act “to provide full and fair disclosure of the character of securities sold in interstate and 

foreign commerce and through the mails, and to prevent frauds in the sale thereof”). See also SEC v. Capital Gains Research 

Bureau, Inc., 375 U.S. 180, 186 (1963) (noting that federal securities laws “substitute a philosophy of full disclosure for the 

philosophy of caveat emptor”). 13 See Rule 156(a)(1) and (2) [17 C.F.R. § 230.156(a)(1) and (2)]. 14 Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)], Section 10(b) of the Securities Exchange Act of 

1934 [15 U.S.C. § 78j(b)], and rule 10b-5 under the Exchange Act [17 C.F.R. § 240.10b-5]. 15 Rule 156(a)-(b). 
4

As the Commission noted, “a Target Date Fund is typically intended for investors whose 

retirement date is at or about the fund’s stated target date.”16 The Commission further noted that these 

investments are “designed to make it easier for investors to hold a diversified portfolio of assets that is 

rebalanced automatically among asset classes over time without the need for each investor” to rebalance

the portfolio.17 Since 2006, Target Date Funds also have become an important investment alternative 

for 401(k) plans, due to their designation as qualified default investment alternatives by the Department 

of Labor.18

Although Target Date Funds are designed to make it easier for investors to diversify the 

investments they use for retirement planning, we appreciate the need for investors to consider a range of 

factors and other information in making an investment decision. Under rule 156, a statement in sales 

material may be misleading due to the “absence of explanations, qualifications, limitations or other 

statements necessary or appropriate to make such statement not misleading.”19 Thus, rule 156 already 

addresses the obligation to provide full and fair disclosure of material information in sales literature. 

Therefore, we do not believe further rule amendments are necessary to address the Commission’s 

concerns about the potential for undue focus on particular factors or representations in sales literature. 

 

IV. Transition Period

The Roundtable agrees that funds should have a minimum 90-day transition period to implement 

the new requirements. Because amendments to the rules could occur at different time periods, we are 

concerned that the transition to the new rules may result in investor confusion because investors would

receive multiple disclosure documents that seemingly cover the same topics. Multiple, serially effective 

regulatory disclosure requirements also would unnecessarily increase funds’ operational compliance 

costs without providing offsetting benefits to investors receiving such information.

The Roundtable believes that coordinating the effective dates for new disclosures requirements 

will enhance investors’ understanding of the information and greatly reduce implementation costs. We 

recommend that the compliance dates for the new rules take place concurrently and at the end of the

calendar quarter. This would enable funds to implement the changes in the normal cycle of updating 

marketing material, which could reduce the compliance costs significantly.

* * *

 16 See Proposing Release, 75 Fed. Reg. at 35921. 17 Id. 18 Id. (noting that 70% of U.S. employers use them as default investments).

19 Rule 156(b)(1)(ii). 
5

The Roundtable appreciates the opportunity to submit comments on the proposed amendments to

rules governing marketing materials for Target Date Funds. If it would be helpful to discuss the 

Roundtable’s specific comments or general views on this issue, please contact me at Rich@fsround.org

or Brian Tate at Brian@fsround.org. 

Sincerely yours,

Richard M. Whiting

Executive Director and General Counsel

The Financial Services Roundtable 

With a copy to:

The Honorable Mary L. Schapiro, Chairman

The Honorable Elisse B. Walter, Commissioner

The Honorable Luis A. Aguilar, Commissioner

The Honorable Troy A. Paredes, Commissioner

The Honorable Daniel M. Gallagher, Commissioner

Eileen Rominger, Director, Division of Investment Management

J. Matthew DeLesDernier, Attorney-Adviser, Division of Investment Management