Third Annual Advisor Authority Study Shows Investors and Advisors Aligned on Importance of Fiduciary Standard - Regardless of DOL Fiduciary Rule
Louisville, KY – June 27, 2017 – The first phase of the Department of Labor's (DOL) Fiduciary Rule went into effect recently, and while investors may not understand every nuance of the new rule, investors and advisors are clearly aligned on the importance of a fiduciary standard, according to the third annual Advisor Authority study conducted by Harris Poll and commissioned by Jefferson National, operating as Nationwide’s advisory solutions business. Likewise, when investors choose an advisor and when advisors are building their practice, a fiduciary standard is a key consideration, according to the latest findings of this online survey of roughly 1,600 Registered Investment Advisors (RIAs), fee-based advisors and individual investors nationwide.
“The industry has been changing for years, as more advisors migrate toward a fee-based approach when providing advice, and as consumers desire more simplicity, transparency and choice in their financial products. It’s a powerful trend—and there’s no going back,” said Mitchell H. Caplan, leader of Nationwide’s advisory solutions business. “The new DOL Fiduciary Rule has been a catalyst for change across the industry and creates opportunity. As part of Nationwide, we are committed to ensuring the company can serve more advisors in the ways they prefer to do business.”
Investors Value Fiduciary
Year over year, Advisor Authority has shown that a fiduciary standard is consistently rated among the top three most important factors influencing an investor to work with an advisor. And as this year’s study shows, among investors currently working with an advisor, nearly half (48%) say they would stop working with their financial advisor if they learned the advisor is not required by law to serve their clients’ best interest.
But while the importance of a fiduciary standard is high among investors, awareness of the DOL Fiduciary Rule is low—at only 38%. And there are misperceptions. While the newly implemented Rule will require financial professionals to act as a fiduciary when advising clients on their retirement accounts, more than half of investors (59%) incorrectly believed that all financial advisors are already required by law to put their clients’ best interests first, including disclosing fees and conflicts of interest.
Fiduciary Standard Helps Advisors’ Drive Growth
The vast majority of advisors (84%) are aware of the DOL Fiduciary Rule. And like investors, advisors are bullish on the benefits of serving clients’ best interests. In this year’s study, more than eight in ten advisors (83%) agreed that a fiduciary model will benefit the growth of their practice, regardless of the status of the DOL Fiduciary Rule. Year over year, Advisor Authority’s findings show that just as a fiduciary standard is consistently rated a top driver influencing investors to work with an advisor, attracting new clients is consistently rated as advisors’ top driver of growth (53% in 2017, 56% in 2016).
Nationwide helps advisors serve a variety of client needs, whether working in a commission-based or fee-based model. The Nationwide Retirement Institute’s recently-launched DOL website provides resources for firms and advisors wrestling with the complexities of the fiduciary rule, such as identifying any new requirements as a fiduciary, taking a close look at the Best Interest Contract Exemption, understanding how the regulations may affect their business and how to address common client questions.