GWAM Fiduciary Recommendation Disclosure for Covered ERISA and IRA Accounts

Overview

This GWAM Fiduciary Recommendation Disclosure for Covered ERISA and IRA Accounts (“GWAM Fiduciary Recommendation Disclosure”) provides additional information to employee benefit plans subject to Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and plans subject to Section 4975 of the Internal Revenue Code of 1986, as amended (the “IRC” or the “Code“) in respect of certain recommendations made by GW Asset Management LLC (“GWAM,” “us,” “our,” or “we”) and its wealth advisors or portfolio managers, in their capacity as associated persons of GWAM (“GWAM Advisers” and such plans, collectively, “Plan Clients”).

GWAM provides non-discretionary and discretionary advice with respect to strategy selection for Plan Clients that invest through GWAM model portfolios and plans. Where GWAM or an GWAM Adviser provides individualized recommendations to a Plan Client based on Plan Client’s particular needs with respect to any GWAM Fiduciary Recommendation (as defined below), GWAM (and the relevant GWAM Adviser) is a fiduciary within the meaning of ERISA for those Plan Clients subject to Title I of ERISA, and Section 4975(e)(3) of the Code for those Plan Clients subject to Section 4975 of the Code.

In addition to this GWAM Fiduciary Recommendations Disclosure, Plan Customers should also carefully review GWAM’s Form ADV Part 2A (the “GWAM ADV Brochure”) for additional disclosure and information related to GWAM Fiduciary Recommendations.

Where GWAM makes GWAM Fiduciary Recommendations to a Plan Client, it may rely upon one or more exemptions, including, among others, Prohibited Transaction Exemption 2020-02 from rules under Title I of ERISA and/or Section 4975 of the Code, as may be applicable (“PTE 2020-02”), that are intended to regulate conflicts of interests. PTE 2020-02 is designed to permit GWAM and GWAM Advisers to provide GWAM Fiduciary Recommendations in your Best Interest (as defined below) under a fiduciary standard of care (as defined under ERISA and the Code) while adhering to prescribed conditions designed to mitigate conflicts.

GWAM Fiduciary Recommendations

GWAM (and the GWAM Adviser) will be deemed to be an “investment advice” fiduciary for purposes of ERISA and the Code when GWAM or an GWAM Adviser makes individualized recommendations based on Plan Client’s particular needs concerning the following (each of the following, when individualized based on Plan Client’s particular needs, a “GWAM Fiduciary Recommendation”).

Transactions and services provided by GWAM and its affiliates arising out of GWAM Fiduciary Recommendations that may be subject to ERISA’s and the Code’s conflict of interest rules may be covered by PTE 2020-02 and under other applicable exemptions. From time to time, we may utilize one or more other prohibited transaction exemptions, to the extent they may be necessary or appropriate.

Requirements under PTE 2020-02

The way GWAM and GWAM Advisers make money creates some conflicts with the interests of Plan Clients, so GWAM and GWAM Advisers may operate under PTE 2020-02 with respect to GWAM Fiduciary Recommendations. PTE 2020-02 requires GWAM and GWAM Advisers to satisfy the Care Obligation and Loyalty Obligation (each as defined below).

Under PTE 2020-02’s provisions, GWAM and GWAM Advisers must:

  • Meet a professional standard of care when making investment recommendations (give prudent advice);

  • Never put the financial interests of GWAM or GWAM Advisers (or their affiliates) ahead of Plan Client’s when making recommendations (give loyal advice);

  • Avoid misleading statements about conflicts of interest, fees and investments;

  • Follow policies and procedures designed to ensure that GWAM and GWAM Advisers give advice that is in Plan Client’s best interest;

  • Charge no more than is reasonable for GWAM’s services; and

  • Give Plan Client basic information about conflicts of interest.

Advice meets the “Care Obligation” if, with respect to an GWAM Fiduciary Recommendation to a Plan Client, the advice reflects the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims, based on the investment objectives, risk tolerance, financial circumstances, and needs of Plan Client. Advice meets the “Loyalty Obligation” if, with respect to an GWAM Fiduciary Recommendation to a Plan Client, the advice does not place the financial or other interests of GWAM, the GWAM Adviser, or other party ahead of the Plan Client, or subordinate the Plan Client’s interests to those of GWAM, the GWAM Adviser, or other party. In addition, neither GWAM nor the GWAM Adviser may make statements (whether written or oral) to Plan Client about an GWAM Fiduciary Recommendation or any other relevant matter that are materially misleading at the time statements are made (including omitting information that is needed to prevent the statement from being misleading to Plan Client under the circumstances), and neither GWAM nor any GWAM Adviser will be insulated or relieved of liability that is imposed upon either as a fiduciary under ERISA and the Code, as may be applicable, when making GWAM Fiduciary Recommendations. When effecting securities transactions arising out of GWAM Fiduciary Recommendations, GWAM and the GWAM Adviser must seek to obtain best execution reasonably available under the circumstances in accordance with applicable securities rules. Finally, the compensation GWAM and the GWAM Adviser receive directly or indirectly arising out of any GWAM Fiduciary Recommendation must not exceed reasonable compensation under applicable ERISA guidance and related guidance under the Code. Under the exemption, GWAM is required to establish, maintain and enforce written policies and procedures prudently designed to ensure satisfaction of these “Impartial Conduct Standards.” PTE 2020-02 also contains additional requirements concerning our compliance. 

For more information, see https://www.federalregister.gov/documents/2020/12/18/2020-27825/prohibited-transaction-exemption-2020-02-improving-investment-advice-for-workers-and-retirees and https://www.federalregister.gov/documents/2024/04/25/2024-08066/amendment-to-prohibited-transaction-exemption-2020-02.

Conflicts of Interest

The way GWAM and GWAM Advisers make money creates some conflicts with the interests of Plan Clients. For this purpose, a conflict of interest is defined as “an interest that might incline a financial institution or an investment professional—consciously or unconsciously—to make a recommendation that is disinterested.”

Where possible, GWAM has taken steps to mitigate or eliminate material conflicts of interest associated with GWAM Fiduciary Recommendations. For a detailed discussion of the material conflicts of interest associated with GWAM Fiduciary Recommendations, please see GWAM’s Conflict Disclosures at gw-assetmanagement.com

Material Facts About GWAM’s Relationship With You

The material fees and costs that apply to GWAM Fiduciary Recommendations made by GWAM to Plan Client and the type and scope of services provided to Plan Client, including any material limitations on the recommendations that may be made to Plan Client, are provided in the GWAM ADV Brochure and the agreement between Plan Client and GWAM.