Exclusive: John Bogle’s Take on Tibble and Fiduciary
John Bogle approves of the Tibble v. Edison decision — is anyone surprised?
Conscience-of-the-industry or cranky old man; however you view the Vanguard founder and investing legend (and we sincerely hope it’s the former), his opinion resonates. As always, he’s sounding off in typically feisty fashion about what the Supreme Court handed down in the high-profile 401(k) fee case.
“I’m really enthusiastic and totally approve,” Bogle tells the 401(k) Fix. “It was a unanimous decision that said in no uncertain terms a trustee has ‘a continuing duty—separate and apart from the duty to exercise prudence in selecting investments at the outset—to monitor, and remove imprudent, trust investments.’”
Of course, it could always be better, and the fact that he’s rarely satisfied probably explains how he found such astronomical success in the first place.
“We have the judicial standard, but now we need legislative language that goes over and above the Department of Labor’s proposal (which I totally support),” he adds. “The fiduciary standard as currently written and interpreted only applies to retirement advisors and investors, but it should apply to all advisors and investors, so I want a big expansion of the definition of fiduciary duty.”
He has particularly strong praise for the words Justice Stephen Breyer used in delivering the opinion, and of course harsh words for Edison International.
“Breyer said that if cost and fees aren’t an issue in 401(k) plans, then what is?” Boggle incredulously asks. “Edison International could have used institutional shares for its employees’ investments and didn’t, opting instead for the higher-priced retail shares. How is that not a breach of the fiduciary standard? It’s so unseemly it’s hard to believe.”
Does he feel validated? Does the court’s decision puts a solid stamp on a six decade career of advocating for low fees and putting clients first?
John Bogle doesn’t bite.
“Over time this sort thing will continue to happen because the knowledge-base of the consumer is bigger,” he diplomatically responds. “The invisible hand is working. We’ve had great markets for so long but they won’t be as good in the near future; P/Es will be higher and yields lower. This means people will pay more attention and put themselves first.”
As for parting advice for those with increasing retirement angst, it’s classic Bogle.
“Just stay the darn course. Figure out what you can afford [to save] and don’t peek. That’s p-e-e-k. Don’t open your 401(k) statement at all until you’re ready to retire, but when you do have a cardiologist handy because you’re gonna be shocked by how much is in there.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of 401(k) Specialist and Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots. Experienced financial services content executive specializing in creative new media delivery. He joined the American Retirement Association in 2023 as Chief Content Officer, overseeing communications for the organization, as well as its sister organizations.
