IMPORTANT INFORMATION REGARDING YOUR CORPORATE RETIREMENT PLAN

The U.S. Department of Labor has finalized Prohibited Transaction Exemption 2020-02 (the “Investment Advice Exemption”), which expanded the Department’s interpretation of who is an investment advice fiduciary under the Employee Retirement Security Act of 1974, as amended (“ERISA”). Importantly, the Investment Advice Exemption permits financial institutions, and their advisors, to continue to provide retirement plan services to their clients in largely the same way they do so today. 

Under this new regulatory framework, Morgan Stanley and its Financial Advisors will be considered ERISA fiduciaries when they provide fund line-up investment advice to your held away ERISA broker of record qualified retirement plan. No action is required on your part.

Below please find a recommended investment policy statement which you may choose to adopt, potential conflicts of interest and how we address them, and answers to frequently asked questions.

We look forward to communicating with you in the future around the evolution of our business and how we address a changing marketplace in the service of our clients.

Morgan Stanley at Work Retirement Solutions

Fiduciary Acknowledgment

When Morgan Stanley Smith Barney LLC, its affiliates and Morgan Stanley Financial Advisors and Private Wealth Advisors (collectively, “Morgan Stanley”) provide “investment advice” regarding a retirement or welfare benefit plan account, an individual retirement account or a Coverdell education savings account (“Retirement Account”), Morgan Stanley is a “fiduciary” as those terms are defined under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and/or the Internal Revenue Code of 1986 (the “Code”), as applicable. When Morgan Stanley provides investment education, takes orders on an unsolicited basis or otherwise does not provide “investment advice”, Morgan Stanley will not be considered a “fiduciary” under ERISA and/or the Code. 

Tax laws are complex and subject to change. Morgan Stanley does not provide tax or legal advice. Individuals are encouraged to consult their tax and legal advisors (a) before establishing a Retirement Account, and (b) regarding any potential tax, ERISA and related consequences of any investments or other transactions made with respect to a Retirement Account.

Important Information About Our Service Model

For a description of services we offer our ERISA broker of record corporate retirement clients, please click the document below.

Description of Services


IMPORTANT INFORMATION ABOUT CONFLICTS OF INTEREST

When providing broker of record services to qualified retirement plan clients, the way Morgan Stanley receives compensation may create some conflicts with their interests, so when providing “investment advice” in these circumstances, Morgan Stanley operates under a special rule that requires Morgan Stanley to act in their best interests and not put Morgan Stanley’s interests ahead of theirs. Under this special rule’s provisions, Morgan Stanley (i) meets a professional standard of care when making investment recommendations (i.e., gives prudent advice); (ii) never puts Morgan Stanley’s financial interests ahead of theirs when making recommendations (i.e., gives loyal advice); (iii) avoids misleading statements about conflicts of interest, fees, and investments; and (iv) charges no more than is reasonable for our services. More information on potential conflicts of interest and how we address them is available by visiting this link.  

View Conflicts of Interest


FAQs

  • What is a fiduciary?
    • The Employee Retirement Income Security Act (ERISA) protects your plan's assets by requiring that those persons or entities who exercise discretionary control or authority over plan management or plan assets, anyone with discretionary authority or responsibility for the administration of a plan, or anyone who provides investment advice to a plan for compensation or has any authority or responsibility to do so are subject to fiduciary responsibilities. Plan fiduciaries include, for example, plan trustees, plan administrators, and members of a plan's investment committee.
    • The primary responsibility of fiduciaries is to run the plan solely in the interest of participants and beneficiaries and for the exclusive purpose of providing benefits and paying plan expenses. Fiduciaries must act prudently and must diversify the plan's investments to minimize the risk of large losses. In addition, they must follow the terms of plan documents to the extent that the plan terms are consistent with ERISA. They also must avoid conflicts of interest. In other words, they may not engage in transactions on behalf of the plan that benefit parties related to the plan, such as other fiduciaries, services providers or the plan sponsor.
    • Fiduciaries who do not follow these principles of conduct may be personally liable to restore any losses to the plan, or to restore any profits made through improper use of plan assets. Courts may take whatever action is appropriate against fiduciaries who breach their duties under ERISA including their removal.

    SOURCE: DOL website

  • How does the Investment Advice Exemption affect my corporate retirement plan?
    • On December 18, 2020, the U.S. Department of Labor issued Prohibited Transaction Exemption 2020-02 (the “Investment Advice Exemption”), which expanded the Department’s interpretation of who is an investment advice fiduciary under the Employee Retirement Security Act of 1974, as amended (“ERISA”).  Importantly, the Investment Advice Exemption permits financial institutions, and their advisors, to continue to provide retirement plan services to their clients in largely the same way they do so today. 
    • Under this new regulatory framework, Morgan Stanley and its Financial Advisors will be considered ERISA fiduciaries when they provide fund line-up investment advice to your held away broker of record qualified retirement plan. No action is required on your part. 
  • How will Morgan Stanley comply with the DOL exemption for broker of record Plans?
    • To comply with the DOL exemption, Morgan Stanley will send a communication to held away ERISA broker of record qualified retirement plan clients.  This communication acknowledges the details of the exemption and the Morgan Stanley’s associated responsibilities. The disclosure will contain a link to this website offering a fiduciary acknowledgement, further description of services, conflicts of interest, and general FAQs.
    • This communication will be served as either a hardcopy mailing or email, depending on what information is available for the held away ERISA broker of record qualified retirement plan client.
  • When can these communications be expected?
    • Communications for held away ERISA broker of record qualified retirement plans will be sent throughout the first quarter of 2022.
  • Who is available to answer questions?
    • In addition to your Financial Advisor, a dedicated Retirement Service team will be available to support qualified retirement plan clients. This group will be available beginning January 14, 2022 to respond to inquiries about the Investment Advice Exemption and its impact to the retirement plans we service. The Service team can be reached at (866) 888-0249.
  • What services will Morgan Stanley provide to assist with this transition?
    • As described herein, this rule expanded the interpretation of investment advice, thus positioning Financial Advisors and Morgan Stanley as a fiduciary  when providing fund line-up investment advice to held away ERISA broker of record qualified retirement plan (“broker of record plan”) clients.
    • A dedicated Retirement Service team will be available to support broker of record plan clients. This group will be available beginning January 14, 2022 to respond to inquiries about the Investment Advice Exemption and its impact to the retirement plans we service. The Service team can be reached at (866) 888-0249.
    • An annual investment monitoring service will now be extended to broker of record plans at no additional fee. The aforementioned annual investment report will include market commentary from the Morgan Stanley Wealth Management Global Investment Committee, a calendar year performance summary, and a summary as to whether funds are on Morgan Stanley's platform or not, and in some cases possible alternatives to funds that are not on-platform. The investment report adopts Morgan Stanley’s standard investment policy statement and a broker of record plan client can opt out of this service by notifying their Financial Advisor.
  • How is my Financial Advisor impacted by the Investment Advice Exemption?
    • The DOL’s definition of fiduciary requires that Financial Advisors act in the best interests of their clients when providing investment advice to their retirement clients. Advisors must also disclose material conflict of interests to their retirement clients when adopting the Investment Advice Exemption.

View a full copy of Our Investment Policy Statement

Have questions?

IF YOU HAVE ANY QUESTIONS OR REQUIRE FURTHER ASSISTANCE, PLEASE REACH OUT TO THE DOL SUPPORT LINE AT 866-888-0249 OR TO YOUR FINANCIAL ADVISOR.

 

FOR QUESTIONS RELATED TO BUSINESS RETIREMENT PLANS, PLEASE VISIT  www.morganstanley.com/disclosures/dol