Consultant Says Distribution Recommendation is "Advice"

In a letter to the DoL, Aon Hewitt said such a recommendation should be included in the definition of investment advice. The firm noted that differentiating between a recommendation to invest in plan options and to invest outside of the plan creates an inconsistency in the application of fiduciary rules under the Employee Retirement Income Security Act (ERISA) and could bias an adviser to recommend a distribution to both avoid ERISA fiduciary status and suggest an investment in which the adviser has a financial interest.  

“We view the application of fiduciary standards to advisers who recommend plan distributions as a logical application of ERISA’s fiduciary rules, and certainly in the best interests of participants and beneficiaries,” the letter said. 

Aon Hewitt added that it anticipates that treating all recommendations relating to the application and management of plan assets consistently may result in more participants leaving their assets in their employers’ plans, which has benefits to both participants and employers.