* See Institute Memorandum to Pension Members No. 42-95, dated October 18, 1995.
December 15, 1995
TO: BOARD OF GOVERNORS No. 78-95
RE: DEPARTMENT OF LABOR INTERPRETIVE BULLETIN ON EDUCATION AND
ADVICE
______________________________________________________________________________
As you may know, the Institute has been working closely with the Department of Labor to
obtain guidance regarding the treatment under ERISA of an employer or service provider, such as a
mutual fund company, that provides investment information to retirement plan participants. This issue
is particularly significant to the fund industry because the provision of “investment advice” could cause
a fund company to become a fiduciary subject to significant responsibilities and potential liability under
ERISA, while the provision of “education” does not create fiduciary status.
The Department has recently released for public comment the attached interpretive bulletin
relating to participant education and investment advice. We are very pleased to report that the draft
bulletin adopts the legal analysis urged by the Institute* and takes an expansive approach to the definition
of investment education. The bulletin describes four safe harbors for the following types of investment
information: 1) plan information; 2) general financial and investment information; 3) asset allocation
models; and 4) interactive investment materials.
We will keep you informed of further developments.
Paul Schott Stevens
Senior Vice President
General Counsel