The Department of Labor’s new fiduciary rule is having a wide-ranging impact on the retirement planning industry. But the rule fails to address retail accounts and plans that do not grow on a tax-deferred basis. Last year Vanguard founder John Bogle declared that the Securities and Exchange Commission (SEC) should have been “the first in line” to issue a fiduciary rule instead of waiting for the DOL to create one. This idea may resonate with investors again, as uncertainty continues to build around the implementation of the DOL's fiduciary rule.

In February 2017, Donald Trump issued a memorandum asking the DOL to review the rule's potential impact through an economic and legal analysis. Not long after, the DOL issued Field Assistance Bulletin No. 2017-01 discussing a possible 60-day delay to the rule's rollout, and calling for public comment. Vanguard responded with a public comment letter from CEO Bill McNabb, requesting a delay of 12 to 18 months, rather than just 60 days, to ensure the DOL can conduct a thorough review of the rule rather than a piecemeal revision and implementation process.

In late 2016, Bogle had said at a panel discussion at the University of Delaware that the SEC should “step up to the plate” and create its own fiduciary rule that can govern retail accounts. He added, “I can’t imagine that your investment representative is going to observe a fiduciary duty to retirement plans,” but then fail to do so when advising on other accounts, such as a college savings plan or retail investment account. At the time Bogle stated that the DOL fiduciary rule was already having a positive impact on retirement plans, noting that Merrill Lynch announced that it will cease to offer mutual funds that come with front-end loads in its retirement plans and accounts. (For related reading, see: Merrill Considers Alternatives to Fee-Only Model.)

Bogle also said that even if the SEC never issues its own version of a fiduciary rule, if implemented, “will become the standard in the brokerage office, and that will become the way of doing business.” The panel also consisted of the three authors of the new book, What They Do With Your Money: How the Financial System Fails Us and How to Fix It. The authors concurred with Bogle regarding the SEC’s failure to issue a rule and criticized the DOL rule for only addressing retirement plans and accounts. The panel also focused on the high level of fees that are charged by intermediaries in the industry and how this has reduced investor returns over time. For now, investors will continue to wait on any new fiduciary standards from either the DOL, the SEC, or both. (For more, see: How SEC and DOL Fiduciary Standards Could Differ.)