The idea that individuals should always receive investment advice that is in their best interest is unassailable. So is the idea that those who provide investment advice should be held to a fiduciary standard. In short, an advisor acts with good faith and trust. These are common sense concepts that Vanguard fully supports.

We also support the Department of Labor’s (DOL) efforts to put these ideas into practice with a fiduciary rule. As the rule has moved through regulatory channels, we’ve weighed in with our concerns, feedback, and recommendations to help ensure investors receive the advice they need. A policy of this magnitude demands rigorous attention to detail. Every provision matters when we’re talking about helping investors make decisions about their financial future, and we’re committed to keeping advice accessible and affordable for everyone.

This week, we provided further comments on the rule, which can be summarized into five areas of focus:

  • Be thorough. The current implementation plan calls for a piecemeal rollout of provisions. We believe a full review of the rule should be completed before any one element is made final. Changes need to be closely coordinated to minimize disruption for investors and redundancies or rework that would ultimately cost investors.
  • Be clear. The rule currently defines “investment advice” in broad terms. This sweeping definition brings with it regulatory requirements that are in some instances sensible but in many cases unnecessary. For example, we don’t believe anyone who encourages retirement plan participants to “save more” is dispensing advice in the same way as a financial planner who is making specific fund recommendations. The former is promoting a best practice, while the latter is acting as a fiduciary. Investors should have access to both types of advice, but they should not be governed the same.
  • Be consistent. As drafted, the rule makes unnecessary distinctions between how advice is delivered (online, in person, or a combination of the two); the topic of advice (such as questions about a rollover or investment decisions); and the type of client (different guidance applies to small and large retirement plans). This fragmented approach is confusing, and will ultimately increase the complexity and cost of advice. We recommend a streamlined, simpler governance structure.
  • Be efficient. We support efforts to address conflicts of interest and enforce violations when they occur, but the rule makes this process too complex and open to misinterpretation. The fiduciary standard will have little merit if advisors are unable to navigate a complicated list of requirements and face the risk of litigation if they fail to comply. Operational requirements should be more efficient and enforcement methods more streamlined in order to preserve investors’ access to advice. Let’s look to enforce existing standards using established and proven regulatory channels instead of adding a new layer of court oversight.
  • Be collaborative. The DOL’s fiduciary rule focuses on retirement investors, which is prudent given how many people need help planning for this complex financial stage. Yet, investment advice is not confined to retirement planning and investing. As this rule moves forward, we’ve asked the DOL to coordinate with its regulatory counterparts to ensure that any future fiduciary guidance take a similar approach. Investors deserve a consistent experience, regardless of the type of account they own or the type of advice they seek. We understand that consensus is difficult to reach, so we’ve also urged the DOL to move forward with their rule as conversations with other agencies continue.

This rule has been years in the making and will fundamentally shape the availability and quality of investment advice. Clarity, certainty, and consistency are required if investors are going to benefit from the trusted advice that can mean the difference between meeting financial goals and falling short. Vanguard has been a vocal advocate for a fiduciary standard and will continue to fight for a well-crafted regulation that puts investors’ needs first.


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