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The future of the DOL fiduciary ruling is anything but certain. We do know, however, that the majority of financial advisors have some concerns about the ruling, with six in ten advisors (60%) favoring repeal. Advisors employed in the broker/dealer channels—particularly the Bank channel (82%)—and commission-based advisors (72%) are most likely to support repeal. In contrast, RIAs, most of whom are predominantly fee-based and already consider themselves fiduciaries, are more likely to oppose repeal (45%) than support it (29%).
The decision to support repeal is not an easy one for firms. Many companies are far down the road in preparation and communication with clients, while others have indicated they will make fiduciary status a point of competitive differentiation. Firms that go back on that messaging could be perceived as not being on clients’ side after all, and hoping clients don’t question the impact of repeal could be very problematic.
In fact, our initial research with affluent investors regarding the ruling indicates that nearly half would only work with a fiduciary going forward while over one-third prefer it. Regardless of the future of the ruling, this shift in preference will create opportunities for advisors acting as fiduciaries. As a result, we’re likely to see a continued shift toward lower-fee investment products.
We’re excited to further explore how shifting regulatory pressures and evolving client expectations will impact advisors’ business practices through a series of follow-up research throughout this year. For more information on how to monitor new competitive forces impacting the financial advisory marketplace, review an overview of our new The Future of the Financial Advisor™ report.