Vanguard has called for changes to the fiduciary rule, suggesting that the Department of Labor (DOL) remove obstacles that it says could complicate compliance and access to investment advice.
The firm has called for the rule’s definition of investment advice to exclude recommendations for investors to save more for retirement and modify extreme asset allocations.
The asset manager argued that encouraging investors to save for retirement does not create a conflict of interest.
In a letter to the DOL, Vanguard chief executive Bill McNabb wrote that the firm also wanted the definition of advice to exclude communications between independent fiduciaries with financial expertise and financial institutions.
He said requiring disclosures between these two parties delayed the exchange of information on products and services.
‘As currently drafted, we are concerned that the rule will reduce investor access to investment advice and education that will result in increased costs of service, ultimately reducing retirement wealth,’ said McNabb.
His comments come as the trade group the Insured Retirement Institute released finding from a survey that claims the fiduciary rule has already limited access to advice, with brokers dropping clients creating so-called orphan accounts.
Orphaned accounts, or accounts that are no longer served by advisors leaving investors on their own, have reached 155,000 since the first part of the rule came into effect in June, according to a July 2017 survey led by the agency.
The rule was only partially implemented in June when two segments of it requiring advisors to act in the best interest of their clients went live. The first part expanded the definition of who a fiduciary is and the second, established fair conduct standards.
The trade association which represents numerous financial institutions wrote its concerns in a lettered response to the DOL’s June request for public comment and urged the department to work with the Securities and Exchange Commission on the rule.