Commentary on International Advisor article by Monira Matin
Fund giants BlackRock and Vanguard have called for a delay to the Department of Labor’s fiduciary rule, International Advisor writes.
Unrealistic Timeline Could Cause Investor Confusion, Execs Say
Following a February order by President Donald Trump to review the rule, the Labor Department has proposed delaying next month’s scheduled implementation date by 60 days, according to the publication.
But Bill McNabb, chief executive of Vanguard, says the delay should be at least 12 months, because a 60-day review is “unrealistic,” International Advisor writes.
McNabb said Vanguard, which managed $4 trillion in assets, stands behind the idea of advisors acting in the clients’ best interests, as the rule purports to do when it comes to retirement adivce. But broad regulations such as the fiduciary rule need to be designed well and implemented carefully, he said on the company’s website, according to International Advisor.
Barbara Novick, vice-chair of BlackRock, meanwhile, wrote to the DOL that the current implementation date could sow confusion among investors and be “unreasonably” costly to the industry, the publication writes.
Many asset managers stand to lose out on several profitable products if the rule goes into effect, International Advisor writes. And some critics point out that the rule would make financial advice too expensive for some clients, according to the publication.
But Vanguard and BlackRock's statements came as a surprise because both stand to win from the regulation, International Advisor writes. The fiduciary rule is expected to cause brokers to push more low-cost passive products such as those offered by the two companies, according to the publication.