DOL Fiduciary Regulation in Global Perspective

Morningstar has released its latest biennial update to its “Global Fund Investor Experience” report, grading the quality and dependability of services delivered to mutual fund investors in 25 countries across North America, Europe, Asia and Africa.

Countries ranked in the index are given a rating of either top, above average, average, below average or bottom. Researchers identified the United States as the most investor-friendly market, but no country received a bottom overall grade. Importantly, more than half of the markets received an overall grade of average, indicating “widespread improvement in investor experiences across multiple markets driven by globalization, stronger regulation, and adoption of best-practice principles.”

Here in the U.S., there is no shortage of debate surrounding the Department of Labor (DOL) fiduciary rule reforms and other regulatory initiatives, which together represent a significant strengthening of the regulatory regime concerning tax-qualified retirement plan investing. As the report lays out, strong regulatory oversight, as exemplified by the DOL rulemaking, remains essential to ensuring the highest quality investor experiences.

Anthony Serhan, managing director of research strategy, Asia-Pacific, at Morningstar, and co-author of the study, notes that regulations such as the fiduciary rule, and similar efforts in Europe, have already started reshaping important aspects of the investing marketplace. Notably, regulators are increasingly “enforcing bans on commissions, requiring or encouraging better disclosure from fund companies, and adopting technologies that can lead to lower costs for investors.”

For U.S. readers, the research highlights the difficult debate on taxation and health care reform that will very likely continue for years to come. Also notable, India joined the U.S. in receiving a grade of top in the disclosure category. The two countries operate “the only two markets requiring disclosure of remuneration practices for fund managers,” Serhan points out.

This year, calculations of asset-weighted median fees in the major asset classes—equity, fixed income and allocation—show continued downward pressure, Morningstar finds. The full report is available for download here.