,,ii #aaeth ,,congress #ast ,session ,s4 #acba ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,june #h1 #bjag,mr4 ,isakson 7for himself1 ,mr4 ,alexander1 ,mr4 ,enzi1 ,mr4 ,hatch1 ,mr4 ,roberts1 ,mr4 ,scott1 and ,mr4 ,young7 introduced the following bill2 which was read twice and referred to the ,committee on ,health1 ,education1 ,labor1 and ,pensions ,a ,,bill ,to amend the ,employee ,retirement ,income ,security ,act of #aigd to ensure that retirement investors receive advice in their best interests1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,affordable ,retirement ,advice ,protection ,act4 #b4 ,purpose ,the purpose of this ,act is to provide that advisors who-- 7#a7 provide advice that is impermissible under the prohibited transaction provisions under section #djf of the ,employee ,retirement ,income ,security ,act of #aigd1 or 7#b7 breach the best interest standard for the provision of investment advice1 are subject to liability under the ,employee ,retirement ,income ,security ,act of #aigd4 #c4 ,rules relating to the provision of investment advice 7a7 ,in general 7#a7 ,definition of investment advice ,section #c7ba7 of the ,employee ,retirement ,income ,security ,act of #aigd 7#bi ,u4,s4,c4 #ajjb7ba77 is amended by adding at the end the following3 7,c7 7i7 ,for purposes of clause 7ii7 of subparagraph 7,a71 the term investment advice means a recommendation that-- 7,i7 relates to-- 7aa7 the advisability of acquiring1 holding1 disposing1 or exchanging any moneys or other property of a plan by the plan1 plan participants1 or plan beneficiaries1 including any recommendation whether to take a distribution of benefits from such plan or any recommendation relating to the investment of any moneys or other property of such plan to be rolled over or otherwise distributed from such plan2 7bb7 the management of moneys or other property of such plan1 including recommendations relating to the management of moneys or other property to be rolled over or otherwise distributed from such plan2 or 7cc7 the advisability of retaining or ceasing to retain a person who would receive a fee or other compensation for providing any of the types of advice described in this subclause2 and 7,,ii7 is rendered pursuant to-- 7aa7 a written acknowledgment of the obligation of the advisor to comply with section #djd with respect to the provision of such recommendation2 or 7bb7 a mutual agreement1 arrangement1 or understanding1 which may include limitations on scope1 timing1 and responsibility to provide ongoing monitoring or advice services1 between the person making such recommendation and the plan that such recommendation is individualized to the plan and such plan intends to materially rely on such recommendation in making investment or management decisions with respect to any moneys or other property of such plan4 7ii7 ,for purposes of clause 7i77,,ii77bb71 any disclaimer of a mutual agreement1 arrangement1 or understanding shall only state the following3 ,this information is not individualized to you1 and there is no intent for you to materially rely on this information in making investment or management decisions44 ,such disclaimer shall not be effective unless such disclaimer is in writing and is communicated in a clear and prominent manner and an objective person would reasonably conclude that1 based on all the facts and circumstances1 there was not a mutual agreement1 arrangement1 or understanding described in clause 7i77,,ii77bb74 7iii7 ,for purposes of clause 7i77,,ii77bb71 information shall not be considered to be a recommendation made pursuant to a mutual agreement1 arrangement1 or understanding if such information contains the disclaimer required by clause 7ii7 and-- 7,i7 it is provided in conjunction with full and fair disclosure in writing to a plan1 plan participant1 or beneficiary that the person providing the information is doing so in its marketing or sales capacity1 including any information regarding the terms and conditions of the engagement of the person providing the information1 and that the person is not intending to provide investment advice within the meaning of this subparagraph or to otherwise act within and under the obligations of the best interest standard as described in this subparagraph2 7,,ii7 the person providing the information is a counterparty or service provider to the plan in connection with any transaction based on the information 7including a service arrangement1 sale1 purchase1 loan1 bilateral contract1 swap 7as defined in section #a;a of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a;a771 or security-based swap 7as defined in section #c7;a7 of the ,securities ,exchange ,act 7#ae ,u4,s4,c4 #gh;c7a77771 but only if-- 7aa7 the plan is represented1 in connection with such transaction1 by a plan fiduciary who is independent of the person providing the information1 and1 except in the case of a swap or security-based swap1 independent of the plan sponsor2 and 7bb7 prior to such transaction1 the independent plan fiduciary represents in writing to the person providing the information that it is aware that the person has a financial interest in the transaction and that it has determined that the person is not intending to provide investment advice within the meaning of this subparagraph or to otherwise act as a fiduciary to the plan subject to section #djd2 7,,iii7 the person providing the information is an employee of any sponsoring employer or employee organization who provides the information to the plan for no fee or other compensation other than the employee's normal compensation2 7,,iv7 the person providing the information discloses in writing to the plan fiduciary that the person is not undertaking to provide investment advice as a fiduciary to the plan subject to section #djd and the information consists solely of-- 7aa7 making available to the plan1 without regard to the individualized needs of the plan1 securities or other property through a platform or similar mechanism from which a plan fiduciary may select or monitor investment alternatives1 including qualified default investment alternatives1 into which plan participants or beneficiaries may direct the investment of assets held in1 or contributed to1 their individual accounts2 or 7bb7 in connection with a platform or similar mechanism described in item 7aa7-- 7,,aa7 identifying investment alternatives that meet objective criteria specified by the plan1 such as criteria concerning expense ratios1 fund sizes1 types of asset1 or credit quality2 or 7,,bb7 providing objective financial data and comparisons with independent benchmarks to the plan2 7,v7 the information consists solely of valuation information2 or 7,,vi7 the information consists solely of-- 7aa7 information described in ,department of ,labor ,interpretive ,bulletin #if-a 7#bi ,c4,f4,r4 #beji4if-a1 as in effect on ,january #a1 #bjae71 regardless of whether such education is provided to a plan or plan fiduciary or a participant or beneficiary2 7bb7 information provided to participants or beneficiaries regarding the factors to consider in deciding whether to elect to receive a distribution from a plan or an individual retirement plan 7as defined in section #ggja7;a77#cg7 of the ,internal ,revenue ,code of #aihf7 and whether to roll over such distribution to a plan or an individual retirement plan 7as defined in section #ggja7;a77#cg7 of the ,internal ,revenue ,code of #aihf71 so long as any examples of different distribution and rollover alternatives are accompanied by all material facts and assumptions on which the examples are based2 or 7cc7 any additional information treated as education by the ,secretary4 4 7#b7 ,exemption relating to investment advice ,section #djh7;b7 of the ,employee ,retirement ,income ,security ,act of #aigd is amended by adding at the end the following3 7#ba7 7,a7 ,any transaction1 including a contract for service1 between a person providing investment advice described in section #c7ba77;,a77ii7 and the advice recipient in connection with such investment advice1 and any transaction consisting of the provision of such investment advice1 if the following conditions are satisfied3 7i7 ,no more than reasonable compensation is paid 7as determined under paragraph 7#b77 for such investment advice4 7ii7 ,if the investment advice is based on a limited range of investment options 7which may consist1 in whole or in part1 of proprietary products71 such limitations1 including a clearly stated notice that the same or similar investments may be available at a different cost 7greater or lesser7 from other sources1 shall be clearly disclosed to the advice recipient prior to any transaction based on the investment advice4 ,the notice shall only state the following3 ,the same or similar investments may be available at a different cost 7greater or lesser7 from other sources44 7iii7 ,if the investment advice may result in variable compensation to the person providing the investment advice 7or any affiliate of such person71 the receipt of such compensation1 including a clearly stated notice that the same or similar investments may be available at a different cost 7greater or lesser7 from other sources1 shall be clearly disclosed to the advice recipient4 ,the notice shall only state the following3 ,the same or similar investments may be available at a different cost 7greater or lesser7 from other sources44 ,for purposes of this subparagraph1 clear disclosure of variable compensation means notification prior to any transaction based on the recommendation1 in a manner calculated to be understood by the average individual1 of the following3 7,i7 ,a notice that the person providing the recommendation 7or its affiliate7 may receive varying amounts of fees or other compensation with respect to such transaction4 7,,ii7 ,a description of any fee or other compensation that is directly payable to the person 7or its affiliate7 from the advice recipient with respect to such transaction 7expressed as an amount1 formula1 percentage of assets1 per capita charge1 or estimate or range of such compensation74 7,,iii7 ,a description of the types and ranges of any indirect compensation that may be paid to the person 7or its affiliate7 by any third party in connection with such transaction 7expressed as an amount1 formula1 percentage of assets1 per capita charge1 or estimate of such ranges of compensation74 7,,iv7 ,upon request of the advice recipient1 a disclosure of the specific amounts of compensation described in clause 7iii7 that the person will receive in connection with the particular transaction 7expressed as an amount1 formula1 percentage of assets1 per capita charge1 or estimate of such compensation74 7,b7 ,no recommendation will fail to satisfy the conditions described in clauses 7i7 through 7iii7 of subparagraph 7,a7 solely because the person1 acting in good faith and with reasonable diligence1 makes an error or omission in disclosing the information specified in such clauses1 provided that the person discloses the correct information to the advice recipient as soon as practicable1 but not later than #cj days from the date on which the person knows of such error or omission4 7,c7 ,for purposes of this paragraph1 the term affiliate has the meaning given in subsection 7g77#aa77;,b74 4 7b7 ,effective date ,the amendments made by subsection 7a7 shall take effect on the date of the enactment of this ,act and shall apply with respect to communications provided or recommendations made on or after #b years after such date4 7c7 ,grandfathered transactions and services ,the amendments made by subsection 7a7 shall not apply to any service or transaction rendered1 entered into1 or for which a person has been compensated prior to the date on which the amendments become effective under subsection 7b74 7d7 ,transition ,until such time as regulations or other guidance are issued to carry out the amendments made by subsection 7a71 a plan or a fiduciary shall be treated as meeting the requirements of such amendments if the plan or fiduciary1 as the case may be1 complies with a reasonable good faith interpretation of such amendments4