ASPPA Comments on Investment Advice

admin | May 5, 2010 | 0 Comments

ARLINGTON, VA, (May 5, 2010) – The following is a statement of Craig P. Hoffman, General Counsel and Director of Regulatory Affairs at the American Society of Pension Professionals & Actuaries (ASPPA) in response to the U.S. Department of Labor’s (DOL) recently proposed regulation related to the provision of investment advice to participants and beneficiaries.

“In response to a regulation proposed by the Department of Labor, ASPPA issues our view on how the agency can best help participants facing the complex task of making investment decisions for their retirement savings. Our comments draw on the expertise of our members and affiliated organizations, which include the Council of Independent 401(k) Recordkeepers (CIKR) and the National Association of Independent Retirement Plan Advisors (NAIRPA).

Thanks to the changes made by the Pension Protection Act of 2006 (PPA), participants and beneficiaries are more likely to receive professional and prudent advice on how to diversify their investments, calculate their risk tolerances and review their investment horizons for a secure retirement.

ASPPA, CIKR and NAIRPA applaud the DOL decision to omit the administrative class exemption that was part of the original release in 2009. We believe the exemption would have exposed participants and beneficiaries to conflicted investment advice without sufficient protection from the potential effect of an advisor‟s conflicts of interest. Furthermore, the exemption was contrary to Congressional intent and we fully support its exclusion from the newly proposed rule.

However, we are concerned that the new proposal seeks input into what are “generally accepted investment theories.” We believe that in doing so, the DOL is going down a path that may unnecessarily interject government regulators into the role of investment advisor by dictating the parameters of what is acceptable. That job is better left to trained and experienced professionals who apply their expertise either when giving investment advice or creating computer models.

Rather than explicitly or implicitly endorsing a particular theory or methodology, ASPPA, CIKR and NAIRPA would instead like to encourage the DOL to continue to hold up a set of core fiduciary values. Those values would include the need for portfolio diversification, investing for the long term, the payment of only reasonable fees for investment services and the need to keep potential conflicts of interest with respect to the advice given to a minimum. While particular investment strategies and products come and go, these core values remain the same and provide benchmarks against which all theories, styles and methodologies should be measured.”

ASPPA’s full recommendations on the Investment Advice Proposed Regulation are available here.

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About ASPPA: The American Society of Pension Professionals & Actuaries (ASPPA) is a national organization of more than 7,000 retirement plan and benefits professionals that serves as the educator, voice, and advocate for the employer-based retirement system. ASPPA members are administrators, actuaries, advisors, attorneys, accountants, and other financial services professionals who provide consulting and administrative services for qualified retirement plans.

About CIKR: The Council of Independent 401(k) Recordkeepers (CIKR) is a national organization of 401(k) plan service providers. CIKR members are unique in that they are primarily in the business of providing retirement plan services as compared to financial services companies who primarily are in the business of selling investments. Collectively the members of CIKR provide services for over 68,000 retirement plans covering 2.8 million participants and holding in excess of $120 billion in assets.

About NAIRPA: The National Association of Independent Retirement Plan Advisors (NAIRPA) is a national organization of firms which provide independent investment advice to retirement plans and participants. NAIRPA’s members are registered investment advisors whose fees for investment advisory services do not vary with the investment options selected by the plan or participants. In addition, NAIRPA members commit to disclosing expected fees in advance of an engagement, reporting fees annually thereafter and agreeing to serve as a plan fiduciary with respect to all plans for which it serves as a retirement plan advisor.


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