Vanguard calls for changes, then moving forward
The Department of Labor is proposing to extend the Jan. 1 applicability date for the remaining portions of the fiduciary rule, according to documents released Wednesday in a court challenge to the rule.
DOL officials said they proposed to the Office of Management and Budget that three exemptions — one for a best-interest contract, a class exemption for principal transactions in certain assets between fiduciaries and employee benefit plans, and certain transactions with insurance agents, brokers and consultants — do not become applicable until July 1, 2019.
The request follows a call by Vanguard that the DOL should move forward with the fiduciary rule while making some changes to get investors to save more and check their allocations, CEO Bill McNabb said in a comment letter submitted to the agency on Monday. Vanguard welcomed the proposed delay until July 2019, to allow time to improve the rule and prepare for compliance.
"Vanguard has seen firsthand how retirement investors benefit from simple and actionable educational messages to save more for retirement using balanced portfolios," Mr. McNabb said in a statement. Recommendations that participants increase their level of savings and balance their portfolios to avoid extreme allocations should not be considered fiduciary investment advice, he told the DOL.
Communications between investors and sophisticated counterparties, including financial institutions, should also be excluded, he argued.
On the issue of whether the Securities and Exchange Commission should play a role in fiduciary regulation of retirement savings, Mr. NcNabb urged the DOL to consider ways to harmonize, but "at the same time, we believe the rule should not be delayed by the lack of consensus among other regulators about fiduciary status, or who should act first, for which accounts and how," he wrote.
"The department should move forward with the rule and remove unnecessary obstacles," he said.
The Department of Labor has called for comments on possible further changes to the rule, including extending the Jan. 1, 2018 applicability date for remaining provisions covering retail investors and providers.