Vanguard Group founder Jack Bogle has always been a proponent of reliable, long-term investing over short-term speculation. Over the years, Bogle has expressed numerous opinions on a multitude of issues about the changes in the financial industry that need to take place to give investors a fair shake. This week, in a wide-ranging interview with Fortune, he declared that a federal fiduciary duty is “the single most important action we need to be taking now.” This comes after two years of industry debate  following the passage of the Dodd-Frank Act.
Bogle’s full comment:

 

Fortune: What is the single most important action we need to be taking now?

Bogle: We need to have a federal statute of fiduciary duty, which would require that fiduciaries place the interest of clients ahead of their own. Conflicts of interest like conglomerates would be disallowed. You can’t serve two masters. The statute would outline the rights and responsibilities of corporate governance. It would include providing services at low costs, putting the interest of shareholders (i.e. their customers) ahead of their public shareholders.

 

Although this interview touched on many topics, the issue of a federal fiduciary standard was at the top of Bogle’s list. The Institute, of course, agrees with his comments. Undisclosed conflicts of interest continue to be a huge problem, and investor trust is understandably low. Conversely, advisors who follow a fiduciary standard of care are legally bound to put the interests of their clients first. The Institute is working to make Bogle’s image of a fiduciary statute a reality as this issue continues to gain support.