A day after a federal district judge in Texas ruled in favor of the Labor Department’s fiduciary rule, former Vanguard founder and CEO John Bogle wrote in a New York Times op-ed that the rule “doesn’t go nearly far enough” because it applies only to retirement accounts and ignores 75% of the assets individual investors own.
Despite those shortcomings, Bogle favors the rule, which requires that financial firms put their clients’ interests first when investing on behalf of their retirement accounts.
Annulment of the rule by the current White House “would clearly be a setback for investors trying to prepare for retirement,” wrote Bogle, in his op-ed titled “Putting Clients Second.” “But the fiduciary principle itself will live on, and even spread.”
(Related on ThinkAdvisor: Trump Tells DOL to Halt Fiduciary Rule; Dodd-Frank Targeted)
President Donald Trump on Friday ordered the current Labor Department to review the rule, which is due to begin to take effect on April 10 (full compliance is not required until Jan. 1, 2018), and on Wednesday the Justice Department asked the Texas judge to delay her pending decision. She didn’t.
(Related on ThinkAdvisor: DOJ Tells Texas Judge to Postpone Ruling on Fiduciary Rule)
Chief Judge Barbara Lynn of the Northern District of Texas instead ruled that the “the fiduciary rule does not exceed the DOL’s authority. … “Congress…assigned the DOL the power to regulate a significant portion of the American economy, which the DOL has done since the statute was enacted,” referring to the Employee Retirement Income Security Act (ERISA).