SALT LAKE CITY, Utah - In researching Vanguard’s Calvert Social Index fund, Patrick Christensen began a dialogue with the Vanguard Group regarding its policy on proxy voting. At issue was how Vanguard voted its proxy shares. Vanguard not only refused to publish its proxy voting record, but admitted that it wouldn’t vote the fund’s shares in accordance with the index’s socially responsible values.

Frustrated, Mr. Christensen began a campaign to raise industry awareness of the shortcomings of mutual fund disclosure as well as greater problems with shareholder rights at America’s largest companies. In this month’s Journal of Financial Planning, Mr. Christensen argues that advisers need to contact the Securities Exchange Commission, New York Stock Exchange, and individual mutual fund companies in favor these key reforms:

1) Give shareholders the ability to nominate board of directors candidates without having to wage a proxy contest and spend hundreds of thousands of dollars of their own money.
2) Require management to honor shareholder resolutions that receive a majority shareholder vote for two consecutive years.
3) Prevent senior management and members of the board of directors from selling company stock until one year after their departure from the firm.
4) Require mutual fund companies to disclose their proxy voting records.

While far from exclusive, these reforms would help restore power to the shareholders, better align management and shareholder interests, provide greater transparency, and ultimately restore confidence in our financial markets and economic system.

Biographical Information: Patrick T. Christensen, MBA, CPA, CFP is a fee-only financial planner and investment manager for Independent Financial Solutions, LLC. You may contact Patrick at 801-487-4536, ptc2@surfbest.net or www.ifs-llc.net

Independent Financial Solutions, LLC

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