PITTSBURGH--(BUSINESS WIRE)--A new survey finds 79% of financial advisors support the ERISA fiduciary standard for advice to investors on rollovers from 401(k) and IRA retirement accounts.
“Though regulators may still be considering whether and how to impose a fiduciary standard on advice givers”
The finding comes as the U.S. Department of Labor (DOL) prepares to propose new fiduciary rules that could draw a wider range of financial advisors under the ERISA fiduciary standard when they advise retirement investors. Current rules allow some advisors to remain exempt from the ERISA fiduciary standard under certain conditions. Some financial services companies are fighting hard to prevent proposal of the rules, which would require brokers to put investors’ interests first.
The 2013 fi360-ThinkAdvisor Fiduciary Survey was conducted by fi360, the premier organization for fiduciary education, investment analytics, support services and industry insights for financial professionals, in partnership with ThinkAdvisor.com, the online news and analysis site for all advisors. This is the third year that fi360 and ThinkAdvisor (formerly AdvisorOne), have collaborated on the survey. The full report on the 2013 fi360-ThinkAdvisor Fiduciary Survey is available here: http://www.fi360.com/uploads/media/fiduciarysurvey_resultsreport_2013.pdf
The survey measures the attitudes of financial intermediaries toward the fiduciary standard and how they apply fiduciary principles – or not – in practice. More than 380 advisors from a broad set of business models, registration types and compensation schemes provided their views. Participants included registered investment advisers, investment adviser reps (RIA/IARs); broker-dealer registered reps; dual registrants – who are both RIA/IARs and BD registered reps; insurance consultants and insurance producers. Their clients include individual and retirement investors.
“This support for the fiduciary standard for retirement investors, coming from registered reps and investment advisors across the spectrum of business models is very compelling,” said Blaine Aikin, President of fi360. “Once again, the majority of professionals understand that putting the best interests of their clients first is in their long-term best interests as well and has become a competitive necessity.”
In other survey results, advisors largely rejected the arguments of opponents of placing investors’ interests first by extending the fiduciary standard for advice. Opponents have argued that the fiduciary standard would increase investors’ costs and limit their access to advice and products. But survey respondents said extending to fiduciary standard to brokers:
- Would not cost investors more for advice (79%).
- Would not price investors out of the market for advice (69%).
- Would not limit access to advice or products (68%).
Survey participants strongly agreed that investors are unaware of the differences between the fiduciary standard governing investment advisers and the much lower “suitability” standard used by the brokers. Of the advisors participating in the survey:
- 97% say investors don’t understand the differences between brokers and investment advisers.
- 72% say the titles “advisor,” “consultant,” and “planner” imply a fiduciary relationship exists.
- 82% say disclosures alone are not sufficient to manage conflicts of interest.
On the retirement issue, advisors said the ERISA fiduciary standard that applies to advice to retirement investors in 401(k) accounts should also apply to IRAs and rollovers from 401(k) and IRA accounts.
- 79% agree that ERISA fiduciary duty should cover advice on rollovers out of 401(k)s and IRAs.
- 72% say the ERISA fiduciary duty that applies to 401(k)s should also apply to advice on IRAs.
- 61% agree that the Labor Department should expand the number of advisors who are considered fiduciaries
“Though regulators may still be considering whether and how to impose a fiduciary standard on advice givers,” said Jamie Green, group editorial director for Summit Business Media’s ThinkAdvisor, “many advisors are already putting their client’s interests first, whether or not they have a legal obligation to do so.”
The survey also showed that compensation models make a material difference in how intermediaries interact with investors.
- Commission-only and commission/fee participants lean away from the fiduciary standard, while fee-only and fee-based participants lean toward the fiduciary standard.
- Most commission-only and fee/commission (more commissions than fees) would rather be fee based (more fees than commissions) or fee-only.
“Last year’s survey provided a wealth of data and we were thrilled to be fielding this survey in partnership with ThinkAdvisor again this year,” Aikin added.
Fi360 offers a comprehensive approach to investment fiduciary education, practice management and support that has established them as the go-to source for investment fiduciary insights. With substantiated Practices as the foundation, fi360 offers world-class fiduciary Training/Education, Tools and Resources that are essential for fiduciaries and those who provide services to fiduciaries to effectively and successfully manage their roles and responsibilities. Fi360 assists those who rely on their fiduciary education programs, professional AIF® and AIFA® designations, Web-based analytical and reporting software and resources to achieve success. For more information about fi360, please visit www.fi360.com or Twitter: @fiduciary360.
ThinkAdvisor.com supports the professional growth and vitality of the Investment Advisory community, from RIAs and wealth managers of all kinds, to independent broker-dealer and wirehouse representatives. We provide unparalleled access to the knowledge, information and critical resources they need to succeed at every stage in their careers, including professional development, education and certification, industry news and analysis, reference tools and services, and community networking opportunities.