registered representative
(8) Provision of investment advice to participant and beneficiaries (A) In general The prohibitions provided in subsection (c) shall not apply to transactions described in subsection (d)(17) if the investment advice provided by a fiduciary adviser is provided under an eligible investment advice arrangement. (B) Eligible investment advice arrangement For purposes of this paragraph, the term “eligible investment advice arrangement” means an arrangement— (i) which either— (I) provides that any fees (including any commission or other compensation) received by the fiduciary adviser for investment advice or with respect to the sale, holding, or acquisition of any security or other property for purposes of investment of plan assets do not vary depending on the basis of any investment option selected, or (II) uses a computer model under an investment advice program meeting the requirements of subparagraph (C) in connection with the provision of investment advice by a fiduciary adviser to a participant or beneficiary, and (ii) with respect to which the requirements of subparagraphs (D), (E), (F), (G), (H), and (I) are met. (C) Investment advice program using computer model (i) In general An investment advice program meets the requirements of this subparagraph if the requirements of clauses (ii), (iii), and (iv) are met. (ii) Computer model The requirements of this clause are met if the investment advice provided under the investment advice program is provided pursuant to a computer model that— (I) applies generally accepted investment theories that take into account the historic returns of different asset classes over defined periods of time, (II) utilizes relevant information about the participant, which may include age, life expectancy, retirement age, risk tolerance, other assets or sources of income, and preferences as to certain types of investments, (III) utilizes prescribed objective criteria to provide asset allocation portfolios comprised of investment options available under the plan, (IV) operates in a manner that is not biased in favor of investments offered by the fiduciary adviser or a person with a material affiliation or contractual relationship with the fiduciary adviser, and (V) takes into account all investment options under the plan in specifying how a participant’s account balance should be invested and is not inappropriately weighted with respect to any investment option. (iii) Certification (I) In general The requirements of this clause are met with respect to any investment advice program if an eligible investment expert certifies, prior to the utilization of the computer model and in accordance with rules prescribed by the Secretary of Labor, that the computer model meets the requirements of clause (ii). (II) Renewal of certifications If, as determined under regulations prescribed by the Secretary of Labor, there are material modifications to a computer model, the requirements of this clause are met only if a certification described in subclause (I) is obtained with respect to the computer model as so modified. (III) Eligible investment expert The term “eligible investment expert” means any person which meets such requirements as the Secretary of Labor may provide and which does not bear any material affiliation or contractual relationship with any investment adviser or a related person thereof (or any employee, agent, or registered representative of the investment adviser or related person). (iv) Exclusivity of recommendation The requirements of this clause are met with respect to any investment advice program if— (I) the only investment advice provided under the program is the advice generated by the computer model described in clause (ii), and (II) any transaction described in subsection (d)(17)(A)(ii) occurs solely at the direction of the participant or beneficiary. Nothing in the preceding sentence shall preclude the participant or beneficiary from requesting investment advice other than that described in clause (i), but only if such request has not been solicited by any person connected with carrying out the arrangement. (D) Express authorization by separate fiduciary The requirements of this subparagraph are met with respect to an arrangement if the arrangement is expressly authorized by a plan fiduciary other than the person offering the investment advice program, any person providing investment options under the plan, or any affiliate of either. (E) Audits (i) In general The requirements of this subparagraph are met if an independent auditor, who has appropriate technical training or experience and proficiency and so represents in writing— (I) conducts an annual audit of the arrangement for compliance with the requirements of this paragraph, and (II) following completion of the annual audit, issues a written report to the fiduciary who authorized use of the arrangement which presents its specific findings regarding compliance of the arrangement with the requirements of this paragraph. (ii) Special rule for individual retirement and similar plans In the case of a plan described in subparagraphs (B) through (F) (and so much of subparagraph (G) as relates to such subparagraphs) of subsection (e)(1), in lieu of the requirements of clause (i), audits of the arrangement shall be conducted at such times and in such manner as the Secretary of Labor may prescribe. (iii) Independent auditor For purposes of this subparagraph, an auditor is considered independent if it is not related to the person offering the arrangement to the plan and is not related to any person providing investment options under the plan. (F) Disclosure The requirements of this subparagraph are met if— (i) the fiduciary adviser provides to a participant or a beneficiary before the initial provision of the investment advice with regard to any security or other property offered as an investment option, a written notification (which may consist of notification by means of electronic communication)— (I) of the role of any party that has a material affiliation or contractual relationship with the fiduciary adviser in the development of the investment advice program and in the selection of investment options available under the plan, (II) of the past performance and historical rates of return of the investment options available under the plan, (III) of all fees or other compensation relating to the advice that the fiduciary adviser or any affiliate thereof is to receive (including compensation provided by any third party) in connection with the provision of the advice or in connection with the sale, acquisition, or holding of the security or other property, (IV) of any material affiliation or contractual relationship of the fiduciary adviser or affiliates thereof in the security or other property, (V) of the manner, and under what circumstances, any participant or beneficiary information provided under the arrangement will be used or disclosed, (VI) of the types of services provided by the fiduciary adviser in connection with the provision of investment advice by the fiduciary adviser, (VII) that the adviser is acting as a fiduciary of the plan in connection with the provision of the advice, and (VIII) that a recipient of the advice may separately arrange for the provision of advice by another adviser, that could have no material affiliation with and receive no fees or other compensation in connection with the security or other property, and (ii) at all times during the provision of advisory services to the participant or beneficiary, the fiduciary adviser— (I) maintains the information described in clause (i) in accurate form and in the manner described in subparagraph (H), (II) provides, without charge, accurate information to the recipient of the advice no less frequently than annually, (III) provides, without charge, accurate information to the recipient of the advice upon request of the recipient, and (IV) provides, without charge, accurate information to the recipient of the advice concerning any material change to the information required to be provided to the recipient of the advice at a time reasonably contemporaneous to the change in information. (G) Other conditions The requirements of this subparagraph are met if— (i) the fiduciary adviser provides appropriate disclosure, in connection with the sale, acquisition, or holding of the security or other property, in accordance with all applicable securities laws, (ii) the sale, acquisition, or holding occurs solely at the direction of the recipient of the advice, (iii) the compensation received by the fiduciary adviser and affiliates thereof in connection with the sale, acquisition, or holding of the security or other property is reasonable, and (iv) the terms of the sale, acquisition, or holding of the security or other property are at least as favorable to the plan as an arm’s length 2 transaction would be. (H) Standards for presentation of information (i) In general The requirements of this subparagraph are met if the notification required to be provided to participants and beneficiaries under subparagraph (F)(i) is written in a clear and conspicuous manner and in a manner calculated to be understood by the average plan participant and is sufficiently accurate and comprehensive to reasonably apprise such participants and beneficiaries of the information required to be provided in the notification. (ii) Model form for disclosure of fees and other compensation The Secretary of Labor shall issue a model form for the disclosure of fees and other compensation required in subparagraph (F)(i)(III) which meets the requirements of clause (i). (I) Maintenance for 6 years of evidence of compliance The requirements of this subparagraph are met if a fiduciary adviser who has provided advice referred to in subparagraph (A) maintains, for a period of not less than 6 years after the provision of the advice, any records necessary for determining whether the requirements of the preceding provisions of this paragraph and of subsection (d)(17) have been met. A transaction prohibited under subsection (c) shall not be considered to have occurred solely because the records are lost or destroyed prior to the end of the 6-year period due to circumstances beyond the control of the fiduciary adviser. (J) Definitions For purposes of this paragraph and subsection (d)(17)— (i) Fiduciary adviser The term “fiduciary adviser” means, with respect to a plan, a person who is a fiduciary of the plan by reason of the provision of investment advice referred to in subsection (e)(3)(B) by the person to a participant or beneficiary of the plan and who is— (I) registered as an investment adviser under the Investment Advisers Act of 1940 ( 15 U.S.C. 80b–1 et seq.) or under the laws of the State in which the fiduciary maintains its principal office and place of business, (II) a bank or similar financial institution referred to in subsection (d)(4) or a savings association (as defined in section 3(b)(1) of the Federal Deposit Insurance Act ( 12 U.S.C. 1813(b)(1) ), but only if the advice is provided through a trust department of the bank or similar financial institution or savings association which is subject to periodic examination and review by Federal or State banking authorities, (III) an insurance company qualified to do business under the laws of a State, (IV) a person registered as a broker or dealer under the Securities Exchange Act of 1934 ( 15 U.S.C. 78a et seq.), (V) an affiliate of a person described in any of subclauses (I) through (IV), or (VI) an employee, agent, or registered representative of a person described in subclauses (I) through (V) who satisfies the requirements of applicable insurance, banking, and securities laws relating to the provision of the advice. For purposes of this title, a person who develops the computer model described in subparagraph (C)(ii) or markets the investment advice program or computer model shall be treated as a person who is a fiduciary of the plan by reason of the provision of investment advice referred to in subsection (e)(3)(B) to a participant or beneficiary and shall be treated as a fiduciary adviser for purposes of this paragraph and subsection (d)(17), except that the Secretary of Labor may prescribe rules under which only 1 fiduciary adviser may elect to be treated as a fiduciary with respect to the plan. (ii) Affiliate The term “affiliate” of another entity means an affiliated person of the entity (as defined in section 2(a)(3) of the Investment Company Act of 1940 ( 15 U.S.C. 80a–2(a)(3) )). (iii) Registered representative The term “registered representative” of another entity means a person described in section 3(a)(18) of the Securities Exchange Act of 1934 ( 15 U.S.C. 78c(a)(18) ) (substituting the entity for the broker or dealer referred to in such section) or a person described in section 202(a)(17) of the Investment Advisers Act of 1940 ( 15 U.S.C. 80b–2(a)(17) ) (substituting the entity for the investment adviser referred to in such section).