The DOL has removed appraisals entirely—not just ESOP appraisals—from fiduciary treatment in its final rules designed to strengthen retirement security. The provision is part of extensive rules that require brokers and other advisers providing investment advice on retirement accounts to adhere to an ERISA-based fiduciary regimen. The proposed rule carved out just ESOP appraisals, but the final rules exempt all appraisals and fairness opinions (see our prior coverage). The final DOL rules are extensive and deal with many issues, so here is a White House fact sheet.
More to come: The appraiser-as-fiduciary issue is not completely put to rest. There will be separate future rule-making on the issue of appraisals and fairness opinions in the context of investment advice subject to the fiduciary requirements.
In the meantime, with regard to ESOP appraisals, the DOL has made past remarks that everyone will "do well to take notice of" the DOL/GreatBanc Fiduciary Process Agreement that covers ESOP transactions and valuation issues. Although the agreement formally applies only to GreatBanc, it serves as an overall “playbook.” For example, it stresses the importance of documenting the reasonableness of management projections and that, if the valuation advisor does not do his or her job in this regard, the trustee should do it.
After the GreatBanc agreement was issued, valuation analysts began to incorporate relevant parts of it into their reports, such as additional boilerplate language and more explanation and documentation. You can get a copy of the actual agreement here, or you can purchase a version with commentary from the attorneys who negotiated the agreement here.
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