New Forces Dramatically Impact Financial Advisors

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The Future of the Financial Advisor Cogent Reports

Regardless of the uncertain fate of the DOL fiduciary ruling, one thing is certain: it unleashed new forces that will dramatically impact financial planning and advice for years to come. With many advisory firms and product manufacturers far down the road in adapting their strategies and communicating these changes to clients, it would be shortsighted for firms to fully reverse course now.

We already see advisors changing their business practices. As advisors move further toward fee-based compensation, predominantly fee-based advisors and RIAs are the only advisor segments that are growing. As a result, we’re seeing advisor-controlled assets gradually shifting toward lower-fee investment products. Compounding the challenge for asset managers, advisors are becoming less receptive to traditional wholesaler outreach and are instead seeking more personalized, on-demand support. Continue reading

DC Advisors Don’t Feel Support in Wake of DOL Fiduciary Ruling

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The Department of Labor (DOL) fiduciary ruling, despite not being fully enacted, as well as the recent calls for repeal and uncertainty regarding timing, has already altered the financial services industry substantially. Heightened fee scrutiny throughout the retirement industry is causing many DC plan providers to be on the defensive, focusing on ways to avoid the next potential pitfall. And although providers may be trying, half of DC advisors report they are not getting enough support from providers with regard to the new rules and regulations. This perceived lack of support in a time of great change will undoubtedly affect advisor perceptions of and loyalty to the providers they work with regardless of the future of the ruling. Continue reading

Ranks of Fee-Based Advisors Expected to Swell

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Despite the uncertain fate of the Department of Labor fiduciary rule, we already see advisors changing their business practices. According to Cogent’s The Future of the Financial Advisor™ report, advisors earning at least three-quarters of their total compensation from asset-based fees could comprise half (49%) of all financial advisors by the end of 2017, up from 38% presently. This shift toward fee-based compensation is primarily being driven by advisors in the National, Regional and Independent channels. Continue reading

As DOL Fiduciary Rule Sits on Ice, Is It Thumbs Up or Thumbs Down for Advisors?

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While the Debate Continues, the Upside of the Ruling Lies With the Investor

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Whether the Department of Labor (DOL) fiduciary rule continues to be delayed, eventually takes effect or ends up being repealed, the proverbial beans have been spilled, as many advisors and their respective firms have already taken the actions needed to comply, thus proving some areas of debate true and others false.

Here are the facts: more than one-quarter (27%) of all affluent investors and over one-third (36%) of advised investors—those currently working with a financial advisor—are now familiar with the DOL fiduciary rule, which expands the definition of an investment advice fiduciary. Among those who are familiar, most (74%) have taken action in the form of talking to their financial advisors, reading about the topic online, discussing the ruling with friends and family and/or reviewing the fees paid for the investments they own. Yet, only 4% have considered changing advisors, debunking the myth that the fiduciary rule has the potential to impose heavy churn on advisors’ client base, and suggesting that there’s more than meets the eye to the investor-advisor relationship. Continue reading

Financial Advisors and Investors at Odds Over DOL Fiduciary Ruling

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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%).

Advisors Weigh in on the DOL Fiduciary Rule

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Building Successful Advisory Relationships

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Amid an era of seemingly unprecedented political and global change, questions around the health and longevity of the financial markets abound. Investor trust in the financial community continues to be tested as factors beyond investors’ control threaten to jeopardize their retirement savings and financial wellness. Meanwhile, ongoing news coverage on the status of the DOL fiduciary ruling, sharpened emphasis on fees and the emergence of robo-advisory services as an alternative to traditional advice models are creating new challenges in the advisor industry. As such, understanding how investor-advisor relationships are established, the key drivers of advisor consideration, satisfaction and loyalty, and the role of trust and value has never been more imperative for advice providers.

Affluent investors don’t typically seek sweeping changes, especially when their long-term goals are funding a stable and healthy retirement. Nonetheless, when trust wanes and cheaper alternative solutions such as robo-advisors are within reach, change can become an attractive option. With those dynamics in mind, we are excited to kick off a qualitative study to explore the critical factors at stake across the key stages of the investor-advisor relationship life cycle. We’ll explore: Continue reading

Forces of Change in the Investor Market

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At the start of writing this year’s Investor Brandscape, the presidential campaign was in full swing, bringing to light a deep political divide spanning the country. Since then, nonstop media attention has been inflating investor anxieties, with topics such as the US election, terrorism and geopolitical events such as Brexit perpetuating investor beliefs that the future of investments is both unpredictable and largely uncontrollable.

Closer to home, the financial services industry is experiencing regulatory changes that could potentially impact more than $16 trillion of retirement assets.1 As a result, affluent American investors report deteriorating trust in the investment community and in traditional financial advisors in particular. As the saying goes, trust takes years to develop but a minute to lose. The reality is that the financial services industry is already heavily regulated, yet the DOL fiduciary ruling is fueling investor perceptions that registered investment professionals put their own needs ahead of their clients. This mistrust trickles down to distributors and product providers as well, creating the dire need for the industry to proactively communicate with frequency and consistency that investors’ interests have always come first in the advisory equation. Continue reading

New DOL Fiduciary Ruling Sparking Unprecedented Levels of Advisor Anxiety

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Advisor Anxiety

While advisors agree with the overall concept and spirit of the Department of Labor’s fiduciary ruling, concerns ring aplenty, as the vast majority have yet to be convinced that the new legislation will deliver on its intent. First and foremost, advisors lament that the DOL fiduciary ruling is casting an overall negative industry gloom and is fueling investors’ focus on fees.

Perhaps even more importantly, advisors believe that the DOL action is forcing them toward a fee-based compensation structure and limiting their product selection. As such, advisors fall into two camps: those who are already fee-based see the DOL action as formalizing an inevitable market shift, while commission-based advisors fear that commoditizing their service puts them at greater risk of being undercut by cheaper automated advice services. Continue reading