Top Pension Group Applauds Legislative Efforts to Promote Investment Advice for Pension Plan Participants

BETHESDA, MD -- NOVEMBER 14, 2001 -- The Committee on the Investment of Employee Benefit Assets, an affiliate of the Association for Financial Professionals (CIEBA of AFP) supports legislative efforts to promote investment advice for retirement plan participants. The Independent Investment Advice Act of 2001, introduced yesterday by Sens. Jeff Bingaman (D-NM) and Susan Collins (R-ME), encourages retirement plan sponsors to offer investment advice services to plan participants with individual accounts.

CIEBA represents more than 120 of the country's largest pension funds. Members manage more than $500 billion in defined contribution (DC) plan assets covering six million DC plan participants.

"This legislation is a positive step for the growing number of employees in 401(k) plans and the corporate sponsors of those plans," said Robert Angelica, chairman of CIEBA of AFP, and chairman and CEO of AT&T Investment Management Corporation. "Recent instability in the financial markets highlights the need for more personalized investment information for 401(k) plan participants. With a growing number of employees having responsibility for making investment decisions about their retirement accounts, they want and need better access to information and advice. By creating a safe harbor, the legislation makes it possible for plan sponsors to offer quality, independent investment advice to their participants."

"CIEBA also recognizes the leadership of Rep. John Boehner (R-OH), chairman of the House Education and the Workforce committee, for his leadership in recognizing the need for investment advice for pension plan participants and bringing the issue to the forefront," Angelica added.

The vast majority of CIEBA member companies (more than 80 percent) provide educational materials on retirement and investment topics to their employees. While employees use this information, many want more specific and personal guidance on investment and retirement-related issues. Oftentimes, employees will not seek guidance on their own because of the cost or lack of confidence in their ability to select a financial advisor.

Under current law, the threat of legal action makes many plan sponsors reluctant to offer investment advice services. This bill addresses this concern by creating a safe harbor for plan sponsors. Sponsors would not incur any potential liability if they follow specific criteria and safeguards for designation and monitoring of an independent advice provider.  The ultimate beneficiaries of this legislation will be employees who, for the first time, gain access to high quality, tailored investment advice through their pension plans.

The Committee on Investment of Employee Benefit Assets, better known as CIEBA, is the voice of the Association for Financial Professionals (AFP) on employee benefit plan asset management and investment issues. Overall, CIEBA's members manage more than $1.3 trillion of plan assets, representing 16 million plan participants and beneficiaries.

The Association for Financial Professionals in Bethesda, Maryland, supports more than 14,000 individual members from a wide range of industries throughout all stages of their careers in various aspects of treasury and financial management. AFP is the preferred resource for financial professionals for continuing education, financial tools and publications, career development, certifications, research, representation to legislators and regulators, and the development of industry standards.

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