Professionally managed alternative for participants

[Guest tschenk]

Does anyone have any comments on the story mentioned in Friday's Benefits Buzz about the recent DoL advisory opinion?

[Jon Chambers]

I'd suggest that the DOL is softening their position on prohibited transactions, which, although consistent with their support for the Boehner bill, may not reflect a good public policy decision. Although I'm generally relatively conservative politically, it does worry me that a new administration may reverse the prior administration's policies in the goal of being "business friendly" before they have a complete understanding of the implications of their decisions.

More broadly, I think we are starting to see the shake-out from transitioning the focus of our retirement system from a DB to a DC structure, and from an employer directed system to a participant directed system. During the bull market of the late '90s, employees clamored for more control. In the recent bear market, employees are clamoring for more help. I'm afraid that they may get what they are asking for, but it won't be what they need. By softening the PT rules, we may be making it easier for investment providers to push their own products, even when these products may not be in the best interest of participants. I'd rather see the DOL pushing for more, simpler disclosure, and advocating the use of truly independent advice providers, such as mPower, Financial Engines and Morningstar ClearFuture. Unfortunately, the lobby for investment providers is much stronger than the lobby for the independent advice providers.

[Guest tschenk]

Jon-

I agree with most of your comments except the part about the Dol advocating truly independent advice providers. Over the past year or so I believe that there have been several occasions where people from the DoL have spoken rather positively in public about providing third-party advice.

The fundamental problem seems much deeper, however, and therein lies the dilemma.

Over the last 20 years, every conceivable self-help educational tool has been tried in an effort to make participants prudent investment managers - workbooks, seminars, videos, interactive software, etc. Some used them, most didn't. Then everyone figured that all these participants really-really want is somebody to just give them advice. It seems logical, but if advice was the answer, it wouldn't have been the cover story of Plan Sponsor magazine (May 2001) saying that the actual usage (much less the utilization) rates have been terrible. It seems the ones using these engines are often the same ones who used the other self-help tools - the motivated ones. I have confirmed this with both providers and sponsors who offer advice engines. That's why I think all the uproar over the Boehner bill is silly for the most part.

The macro picture suggests that the overwhelming majority of these participants don't have the time, knowledge, or desire to manage their retirement portfolio in a prudent and disciplined manner. Everything else has been tried. What they want is for someone just to do it for them. Most just don't want to deal with it. Cripes, they don't even want to open their statements!

There has to be over 35 million people in these plans and I do not recall ever reading a story about a company that educated their employees to the point of being skilled portfolio managers. And how much are these people leaving on the table each year from doing either bonehead or "less than efficient" decisionmaking in their account? 1%, 3%, 5%? I don't know. That's an immense opportunity cost by retirement time. And how much money is wasted by companies sponsoring ineffective educational seminars? How many plan sponsors sigh when they see the (shrinking) company match being poorly invested?

And no, I do not think lifestyle funds are the answer. They've been around for ten years and if those worked, Hewitt wouldn't have put out a paper about all the problems with them. By now these are "positioned" in participants minds so how would you undo that? With educational seminars and more brochures?

These plans never should have evolved into being the primary retirement source for millions of Americans, but they are and that trend will probably never change. What most participants want is some one to do everything for them. I believe they really do want a professionally managed alternative to be available to them. The solution does work. The trick is how to do it properly.

[Jon Chambers]

My point about the DOL no longer supporting independent advice is a relative one. Sure they still support it, but they also support "conflicted" advice, as their support for the Boehner bill illustrates, and as the new Sun America opinion letter shows. I thought the DOLs position had more integrity when it was more consistent. Compare the Frost opinion letter to the Sun America opinion letter and you'll see what I mean.

I don't disagree with your contention that education has been ineffective, and that most participants would be better off passing investment responsibility to a qualified third party. I'm simply stating that having 35 million (your number) participants hire qualified investment advisors to manage their DC assets is inherently more costly, and over the long run, probably less effective, than having 35,000 plan sponsors (my number, assuming 1,000 participants/plan) hire qualified investment advisors to manage their DB plans. I'm afraid that we are introducing the potential for increased investment "slippage" by driving up investment costs, at the very time that market returns appear to be diminished. I'm not suggesting solutions, I'm simply identifying a problem, and suggesting that with its new policies, the DOL isn't helping the situation.

[Guest tschenk]

The answer lies in between. Having 35 million participants hire investment managers is indeed impractical and costly. But it is not impractical for 35,000 sponsors to hire a manager and make it available for the participant to freely choose to use. There is a way to have the best of both worlds. The biggest variable is the cost of the investment vehicle - the mutual funds. Institutionalize the k plan.

[Jon Chambers]

I won't disagree with your closing point. Controlling the cost of funds used through the plan is a fiduciary responsibility, a focal point for the DOL and an issue that is likely to be increasingly litigated (see the Nationwide case). But I'm not sure how having the sponsor hire an investment advisor that plan participants can choose to work with (or not) helps matters much.

Either the advisor works closely with the individual participant, which is admirable and desirable, but drives up the cost astronomically, or the advisor relies on model portfolios and automated risk tolerance profiling--techniques that are simply a less efficient replication of what could be done with lifestyle funds and on-line investment advice. And selecting the approved advisor is a fiduciary function that adds significantly to the plan sponsor's potential liability.

The real problem stems from a system that forces 35 million participants to choose how to invest their retirement assets (even if one choice is to hire an advisor). I'm non a Luddite who believes we should go back to the days of no investment choice. And I am an investment advisor, so I'd be pleased if I thought that professionally managed accounts were a viable solution. I'm simply suggesting that if, on the margin, corporations allocated slightly more of their benefit dollars to professionally managed DB plans, and slightly less to participant directed DC plans, over time, the average participant would see a dramatic improvement in their retirement security.

[Guest tschenk]

And I agree with your closing point. In a perfect world, indeed corporations should emphasize DB plans over DC but not only has the trend gone the other way, but after the havoc the markets brought down on DB plans over the last 2 years they have to be even less attractive than ever. And with the unilateral ability (flexibility) to cut the match in DC plans, those have to look even more attractive than ever.

But I diasgree with your other points. Especially your point about it being a viable solution. http://www.plansponsor.com/content/magazin...keMyMoneyPlease

(If this link works) This is a story where it was done inexpensively and without "model portfolios", or lifestyle funds (which are very expensive) Yes, a participant could have gotten to the same place with an online advice engine - but that's the exact problem - most don't, have no desire to, and never will.

Look at the utilization rates in this story! Have you ever seen them that high for any single investment choice or plan option/feature? Have you ever seen a stronger mandate from participants as to what they really want in these crazy plans? No one was a captive in this feature, they were always free to do it on their own the old way. They weren't "forced" to make decisions they don't want to make. I believe that the utilization rates were that high because the decision to let a professional manage their account was an infinitely easier decision to make over which lifestyle fund should I choose? ("The news scared me today, so I must want a conservative lifestyle fund instead of an agressive one like before. Or maybe I'm medium..no, maybe I should just get some of each plus come of the health care sector fund...") Or, "I think I'll sit down at the computer tonight and model a few scenarios with various economic assumptions."

I believe the decision of the participants in the article was like choosing to take your car to a mechanic rather than figuring out what's wrong by studying the manuals. In their mind, I believe, it was a completely different "type" of a decision than a participant has ever had to make. A great TPA I know once told me most don't want to know how to build a clock, they just want to know what time it is!

The fiduciary liability that the sponsor assumed is a whole other topic. Briefly, I would argue that it is a better situation than in most existing plans where the sponsor knows (and does nothing about) participants are making poor choices, knows they are staying in default elections, knows they are accumulating too much company stock, and on and on. If they were making poor choices, they must not have understood the information they were given. Why would participants act against their own best interests if they understood the information they were given? So if they didn't understand it, could it be argued (in our legal system with a legacy of upholding victim's rights) that they didn't have "control"? If they didn't, guess who did? - The investment committee perhaps? A lot of ERISA came out of old trust law. It's pretty crusty reading but if the courts ever dig into how a fiduciary under ERISA should act and what they should know, it's a good place to start.)

With the right arrangement, why would the fiduciary's liability be greater than exercising due care in selecting a money manager for a DB plan?

There's a lot of misconceptions about a professionally managed alternative for participants. It's not exactly "cutting edge". It's only a variation or refinement of how the original 401(k)s were back in the 1980's before it became accepted wisdom that participants can do this investment stuff on their own. As we've discussed, some models are cumbersome and impractical, some feel suspicious, some are far too expensive. - but not all of them. Per the story, some seem to work just fine. I believe in the next several years the best will become standard features in DC plans. Every do-it-yourself idea has been tried. The time to fix this problem - instead of fidgeting with it - is brutally short especially with shrinking matches and skinny expected returns.

I'm just tired of seeing everyone wring their hands over these tired issues of how to fix some of these problems. There are solutions. And some have been tested thru the toughest market conditions investors have seen in a generation.

PS: I didn't mean to get on a soapbox here. Must be too much coffee this morning.

[Jon Chambers]

I don't want to get into a shouting match. It's clear you believe passionately in the approach. Based on your profile and your web site links, I presume you are affiliated with ICM Asset, one of the providers delivering the service described in the article (I saw the original when it appeared in Plan Sponsor). This isn't intended as a slam, but you may not be completely objective about your firm's services. And you have to agree that the very fact that Plan Sponsor did a feature article on the company illustrates that the approach taken was unusual enough to generate interest.

Further, lifestyle funds aren't necessarily expensive. Vanguard's LifeStrategy funds charge 0.28%, all in. I'm not aware of an individualized advice product that can get close to that rate for both advice and investment management. Furthermore, Vanguard is now offering participant level investment advice through Financial Engines for no additional charge.

From a fiduciary standpoint, selecting an investment advisor for a DB plan is a materially different proposition than selecting an investment advisor for a participant directed DC plan. First, if the DB advisor performs poorly, the DB plan sponsor will face a greater funding requirement. If the DC advisor performs poorly, plan participants will face a substandard retirement. Different parties bear the cost of poor performance, which is what drives the liability. Further, the DC advisor has a much tougher job. Delivering specific and appropriate advice to thousands of participants is more challenging that delivering specific and appropriate advice to one plan. The chance of a mistake that leads to liability is consequently much higher in the DC environment. I find it interesting that the article indicates that ProManage was the only advisor willing to take on the fiduciary responsibility of making completely automatic contribution allocations for employees. This tells me that few investment advisors see this approach as a viable business model.

I'm sure that your company does a good job and takes its fiduciary role seriously. Your fees are also probably reasonable. If you go back to my earlier posts, you'll note that my concerns stemmed from the fact that the DOL seemed to be minimizing the fiduciary role played by the advisor. You have to agree that many so-called investment advisors are more interested in pushing product and maximizing their compensation than in providing high quality, low cost services to clients. These people also tend to have the best sales skills. Pity the poor plan sponsors that select these entities to act as the approved advisor. Do you think that those plan sponsors would face no fiduciary liability? Do you think that they wouldn't have been better off trying to comply with the ERISA 404© guidelines?

Finally, the utilization numbers cited are good, but not that unusual. On-line investment advice providers typically find about 50% of the plan population will use the service if it's paid for by the plan sponsor. Our experience working with a cross-section of plan sponsors for whom we provide investment education and model portfolios is that 50% to 70% of assets end up in the models that we design--higher than the 50% of assets cited in the article.

My point is not that your approach is bad--I actually think it's good and commendable. It's that very few organizations deliver quality services using this model, that delivering service under the model is difficult and costly, that the model could easily be co-opted by unscrupulous providers, and that alternate models offer the possibility of comparable results at lower cost, with less potential fiduciary liability for the sponsor. Is there a place in the market for your company's programs? Yes. Is it right for everyone? No.

[Guest tschenk]

Jon, there's no shouting match to get into. In fact, I really didn't expect this thread to get as involved as this but I didn't want to leave any readers with the impressions that some of the things you stated were gospel as it related to what we do.

God bless Vanguard's low fees (I really mean that) but there are a lot of plans out there that are not with Vanguard or do not have them as an unbundled choice. But it still doesn't solve the misuse and misunderstanding of lifestyle funds by participants.

Regarding the utilization numbers mentioned in that article of over 80% of participants but with about 50% of assets, clearly it's the "little guys" in the plan (but not always, there are some 6-figure participants) that are often attracted to this solution - but aren't these often the ones who have always needed the most help? Is this not the nut that everyone's been trying to crack? Anyway, large or small, the participants pay for this service - not the plan as a whole, nor the company.

The fiduciary considerations and issues involved, scrutinized and addressed by (I don't know how many) legal counsel was mind boggling. But if there were any conflicts, we wouldn't have been doing this for the past several years. I can't answer why other investment advisors have not done this but viability was not an issue for us at least. It's quite viable.

The part about "few organizations delivering quality services using this model, or that delivering service under the model is difficult and costly, that the model could easily be co-opted by unscrupulous providers, and that alternate models offer the possibility of comparable results at lower cost, with less potential fiduciary liability for the sponsor" lost me but I'd just rather drop the whole back and forth issue.

The whole purpose of the thread was to wake up the readers that the time has come to look at adding a professionally managed alternative - or even model portfolios like your firm is involved with - or what SunAmerica or whomever else is attempting to do.

There are solutions out there that not everyone is familiar with. Look into them, compare costs, implementation, thoroughly explore any and all fiduciary questions with your counsel, and involve your consultant to examine the investment process/philosophy/approach. Especially ask for referrals! Pick every aspect of this apart to make an informed decision. (But for goodness sake, don't draw conclusions from discussions and biased, passionate opinions - even mine - on a message board!)

The industry has tried everything in the book to force the "self-help" model in DC plans to work for almost 20 years, so people need to stop doing the same old tired things. When it comes to people's money, it's an emotional thing and does not always lend itself to intellectual solutions. It works for some (minority of) participants but there's a huge contingent that remains bewildered and uncomfortable and lacking the time for managing an investment portfolio.

But do SOMETHING different this year because the old way(as it is in most plans) is inefficient and leaves many participants with huge opportunity costs over their investment lifetime. There's tons of academic studies and industry surveys that back that up and if you are a plan sponsor (and thus a fiduciary), you need to be aware of how screwed up the present situation is.

That's all I wanted to say. Sorry for the big detour in the middle. Done. The end. Finito.

[IRC401]

The original comment asked for comments on the new Advisory Opinion. I read it three or four times and decided that I had to read between the lines to figure out what was going on. Because the facts are so vague and because the letter appears to conflict with (or at least significantly modify) the Frost letter without mentioning the Frost letter, I wonder if the DoL really understands what it opined on. I expect another letter on the subject, but I have no idea when.

[Guest Pete Swisher]

At the risk of being a non-purist, I thought the DOL letter did a good thing--make it marginally easier for participants to finally get the answer to the question every single one of them always asks: "So what should I do?" Requiring the use of an independent advisor seems like a reasonable solution to me. The Boehner bill would remove even that constraint so that even parties at interest could provide advice. I have mixed feelings about that last, but am curious to see if careful wording of an advice safe harbor might yield a reasonable result.

Here's a great example of why I think this might be OK: last year I took over a doctor group plan in which a physician had watched his $1.8mm balance shrink to about $800,000. His asset allocation consisted of seven Fidelity funds, recommended by his personal Fidelity advisor (a phone relationship, but one he liked very much and wanted to keep despite everything), with roughly 95% of the assets in Large Cap Growth. I'm a CFP, and I'm fairly certain that such an asinine allocation would be a breach of my professional ethics. If I recommended said allocation to a client and that client sued, I would expect to lose. Yet the fidelity "advisor" put the doc in those funds with a straight face, apparently based on an in depth analysis of three-year returns of Fidelity large cap funds. Here's the point: if the Boehner bill passed (or at least, as I understand the Boehner bill, which I have not read), Fidelity would become a fiduciary by choosing to offer advice. Fidelity would be liable for its highly trained advisor's advice to put 95% of assets into funds appearing in Money magazine's top 100 list. It's a two-edged sword and I bet Fidelity and others will be very careful about which end they grab. Result: perhaps participants can get an answer to the question, "what should I do" based on the best that the fund family/insurance company has available for that participant in that plan. That would be a good thing.

FYI, The SunAmerica letter has nothing to do with the Frost letter, and I'm guessing that Jon's reference to Frost had to do with the concern for fiduciary integrity explicit in Frost (one of three letters in which DOL clarified its stance on revenue sharing).

[Scuba 401]

I just discovered this thread while looking for commentary on the Sun American opinion. I am having a difficult time reconciling it with Frost. It really seams to say that a fiduciary (investment advisor) can receive additional compensation so long as the individual investment decisions or recommendations are independent (not the result of the Fiduciary's excercise of authority or control) and the compensation is fully disclosed. any opinions would be welcome.

[Jon Chambers]

I agree that the SunAmerica opinion directly conflicts with the Frost opinion. I surmise that DOL is attempting to make it easier to provide advice, by softening the requirements for providing advice. I'll refrain from giving my opinion as to whether or not this is a favorable development.

[Guest tschenk]

Jon-

Go ahead. I'd like to hear your opinion.

[Scuba 401]

i am not jon but if you think about the sun america model, it really is not deterimental to the participants. it is really just bringing a higher level of advice to participants. my thinking is sun america has some applicability to lifestyle or model portfolio type approach where an independent investment consultant creates and modifies the portfolios. although my firm is an investment advisor and a fiduciary since we have hired this independent consulting firm to create the portfolio we are not violating 406(B).

[Jon Chambers]

I think the advisor's compensation should be fixed for the advice (as Frost presumes), not variable based on the advice (as SunAmerica permits). Despite the various constructs under SunAmerica designed to protect the objectivity of the advice (advice must be based on a model developed by an independent provider, relationship can't drive more than 5% of independent provider's revenues, etc.), if advice drives future revenues, there will always be an incentive for the user of the advice program to skew the advice to increase their own revenues. I know most advisors are ethical, and most advisors would do their best to be objective, but some wouldn't. I'm similarly concerned that the least ethical advisors would pursue conflicted advice the most aggressively, as they would generate more revenue than the truly objective advisor. Since ERISA is designed to protect participants, I think it should protect all participants. And I think SunAmerica represents a possible erosion of ERISA's protections.

[Scuba 401]

One thing that worries me is how sun america totally fails to address the offset approach of Frost. Sun America is allowed to keep the excess while Frost had to give it to the Plan. This I dont get.

[Jon Chambers]

That's essentially my point. If you think about how the economic incentives work under SunAmerica, it's clear that an advisor would be biased in favor of higher equity exposure--this would generate higher fees now (since equity funds tend to have higher expense ratios than fixed income funds) and higher fees later (since more equities presumably means a higher expected rate of return). However, the advice to increase equity exposure may not be appropriate for the participant. If my hypothesis is correct, and if SunAmerica had been adopted and utilized in the mid-late '90s, many participants that relied on conflicted advice would be even worse off than they were with no advice.

[mbozek]

For those of us who are quantatively challenged, it might be good to know just what is the difference in fees that are paid in these accounts, e.g., traditional mgt fees are 1% of assets, separate account fees are about 2%, etc ,and performance results of the options. Several clients have been approached by investment advisors to manage their pension and personal accounts and I have never been able to figure out what is a good or bad asset management approach. For example, one client was approached by a brokerage unit of a major financial institution which would manage all his accounts by investing in mutual funds for a 2% fee. The manager would determine the proper asset mix of the portfolio and invest accordingly. Since this client was retired, a large portion of the assets would be in fixed investments such as bond funds which have fees of 35-40 basis points so why should the client pay another 160 basis points to select a bond fund?

[Guest tschenk]

mbozek -

I believe what you are refering to is a wrap program or separately managed account. In other words what you described sounds like a retail product for an individual - and those fees sound obscene, by the way.

This thread refers more individuals in participant-directed plans to have their account diversified, allocated, rebalanced, etc. for them instead of (not) doing it on their own.

[Jon Chambers]

For some perspective, Vanguard's lifestyle funds (called LifeStrategy funds) (which are funds of Vanguard funds) have a weighted average expense ratio of approximately 30 basis points (0.30%), and no additional fund level fee. Fidelity's lifestyle funds (called Freedom funds) have a weighted average expense ratio of approximately 70-80 basis points, plus an additional 8 basis point fee. Frank Russell offers lifestyle funds (called LifePoints funds) in various share classes. Underlying expense ratios are approximately 70-80 basis points, plus an additional fee of up to 100 basis points as a service fee (commission) to the entity distributing the fund. Other fund companies offer significantly more expensive lifestyle funds. By definition, lifestyle funds are not customized for the individual participant.

In general, fees for creating customized individual portfolios by a credible independent investment advisor run approximately 100 basis points, depending on the size of the account. This illustrates the small account problem. Someone with a $5,000 balance would generate a $50 annual fee--insufficient for most advisors to support an individual relationship. So most credible independent investment advisors don't offer across the board services to all plan participants, but are only willing to work with larger balance participants. Some new investment advisory entities are willing to work with all participants. I'm not sure how they price their services.

[Guest Pete Swisher]

On the issue of conflict between Frost letter and Sunamerica (SA)--I don't think there is a conflict based on one point: the nature of the fiduciary's activity. The SA letter said that SA was a fiduciary, but did not say that SA had discretion or that it would be advising plan sponsors on which funds to choose--a key point. Frost says that when the provider does not offer advice on which funds to choose, the fiduciary (i.e., the Trustee--Frost) may keep the revenue share. In SA's request for a PT exemption their fact pattern did not mention that SA would be advising clients on the advisability of specific funds. In the absence of specific recommendations there would not appear to be any conflict with Frost, since Frost has an entire section ("When the Trustee is Directed") addressing such an arrangement. In other words, Frost didn't say that fiduciaries couldn't keep rev share; it said that Frost (as a directed Trustee and therefore a fiduciary) COULD keep the rev share when it wasn't making recommendations on the advisability of investing in particular funds--even though it was a fiduciary. SA may be making more money (i.e., not rev neutral) on certain investments, but so long as SA is not recommending on advisability of specific funds it can keep the added comp, even if it's a fiduciary.

As to whether Ibbotson's ability to accept asset-based comp conflicts with Frost, that seems unlikely to me--Jon's argument above makes sense, but I went back and read Frost and it seems to me that the issue of the Financial Expert's (Ibbotson's) comp (or any fiduciary's comp) being asset-based vs. fixed is not addressed in Frost other than, possibly, by implication. Such a "spirit of the law" interpretation seems open to challenge

I agree about possible erosion of ERISA protection, but as a practical matter I think advice is good, we need more of it, and the SA letter was a big help in clarifying how DOL will view vendors' approach to the problem. I think it very interesting (and surprising) that DOL supported the Boehner Bill with its "conflicted advice" provision vs. supporting the senate "independent advice" approach. As an advisor I like the independent approach, but view either approach as beneficial for participants.

Interesting side note: SA clarifies that the advice provider (i.e., Ibbotson in this case) is a discretionary fiduciary--are plan sponsors aware of the implications?: 404(a) due diligence; no effective delegation without written acceptance by vendor; possible effect on 404© protection when advice is offered; weighing risk of imprudent participant allocation against potential loss of 404©, etc. Offering advice may be good, but is not without consequence.

[Jon Chambers]

Hi Pete. You raise some interesting points. I checked back on the opinion, and found the following relevant summary from The Groom Law Group:

"SunAmerica originally applied for its own individual exemption. In issuing the advisory opinion, however, the Department concluded that the proposed structure would not involve a per se prohibited transaction, if in fact the investment services are performed by the unaffiliated financial expert hired by SunAmerica, by using computer software developed by persons unaffiliated with SunAmerica, or by a combination of the two. SunAmerica is not free to deviate from the decisions of the financial expert, and it must not be in a position improperly to "influence" those decisions. Under these circumstances, even though it will be marketing the investment services as its own and will accept fiduciary responsibility for them, the Department agreed that SunAmerica would not be "acting" as a fiduciary in a way that could generate higher fees for itself and its affiliates, and so would not be engaged in a prohibited transaction. The Department further noted, however, that this does not relieve SunAmerica of its fiduciary responsibility for the initial selection and ongoing monitoring of the financial expert's services."

So, it seems you are right--under the letter, Ibbotson is a fiduciary, and SunAmerica is not. Unless, of course, the SunAmerica (or other brokerage) representative "influences" the participant's decision.

Gosh! I can't imagine that happening. I've never known a broker attempt to influence a participant's investment decision, and certainly never with the intent to "generate higher fees for itself and its affiliates". ;-))

While I see your point as to the distinction between fund selection recommendations and asset allocation recommendations, I believe both impact the trustee's revenues. Asset allocation recommendations that direct more assets to high revenue share funds could have just as great an impact on revenue as changing to fund selections. Still, the whole thing is somewhat ambiguous until we get some real case law on the topic.

One of the other points made by Groom was that, "It is widely believed that some exemption applications were made for "marketing" purposes as much as any concern over potential prohibited transactions." I can't imagine that financial services firms would stoop to such low levels--can you?

[Guest Pete Swisher]

Jon,

I'm all over this--I want my own advisory opinion now. Just look at the great press SunAmerica has gotten. I think DOL could do quite a brisk business in PT exemptions and advisory opinions. It could be sort of like the sale of indulgences in the middle ages--a piece of the true cross or the shinbone of a saint for a small fee.

[Bill Presson]

Pete,

Sometimes you get the shinbone of a saint and sometimes you get the jawbone of an ass! :-)

[k man]

jon, sorry to bring up this old thread but i read one of your statements and i dont think it is accurate. i think the opinion clearly states sunamerica would be acting as a fiduciary. i have a question for you or anyone else - lets say a provider (TPA) that is not a RIA wants to offer this service through a third party. do you think they can or do you think the RK (TPA) would have to be eastablish an investment advisorory relationship with the participant as well. this would obviously pose a problem for RK (TPA's) that are not RIA's.