ASPPA Asks for Retirement Plan Exemption from Adviser Rules

April 15, 2011 ( - The American Society of Pension Professionals & Actuaries (ASPPA) and the National Tax Sheltered Accounts Association (NTSAA) expressed concern over how the application of proposed new rules by the Securities and Exchange Commission will impact retirement plan professionals who work with government-sponsored retirement plans.

A statement from Craig P. Hoffman, General Counsel and Director of Regulatory Affairs of ASPPA, said “We believe that the Dodd-Frank Wall Street Reform and Consumer Protection Act was not intended to extend the municipal advisor registration requirements to those who work with governmental retirement and savings plans. This is particularly true for governmental retirement savings plans funded exclusively with employee contributions. Similarly, providers of advice and information to the participants in governmental retirement and savings plans should not be subject to registration as municipal advisors.”  

Hoffman explained that many professionals that work with participants in governmental defined contribution 403(b), 401(a), 457 and traditional retirement plans are not engaging in ‘municipal advisory activities.’ He noted as an example those who work with teachers in public schools who participate in a 403(b) savings plan sponsored by their school district. In many cases, these plans require employees to direct how their accounts will be invested among the options that are offered, and it may be that a professional provides a wide range of participant advisory services such as general investment education, computer investment modeling and individual investment advice which may be provided by investment advisers and their associated persons which are not required (or permitted) to register with the Commission.  

Hoffman contended that if the Act’s registration requirements (see SEC Proposes New Rules for Advisers) were to be applied in this context, it would have a severe chilling effect on the availability of advisory services, and may cause a market disruption in favor of larger, SEC-registered investment advisers by subjecting only smaller, local investment advisers to the municipal advisor registration requirements and associated MSRB rules.   

“Clearly, a law aimed at regulating the practices associated with municipal bonds should not be applied inappropriately and inconsistently to those advising participants in governmental retirement and savings arrangements,” Hoffman said.  

“ASPPA and NTSAA recommend that the Proposed Rule be clarified to exclude advice given to participants in governmental retirement or savings arrangements sponsored by municipal entities, and that state-registered investment advisers be exempt from the definition of “municipal advisor” to the extent they are providing advice that otherwise would be subject to the Investment Advisers Act, but for the operation of a prohibition to, or exemption from, Commission registration.”