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

Insights Powered by Cogent Reports™    

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


Whether the Department of Labor (DOL) fiduciary rule continues to be delayed, eventually takes effect or ends up being repealed, the proverbial beans have been spilled, as many advisors and their respective firms have already taken the actions needed to comply, thus proving some areas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

Among affluent investors familiar with the DOL fiduciary rule, two-thirds (64%) report that their perceptions of financial advisors have not changed. Moreover, we find a net positive result in opinion, as 24% of investors familiar with the rule cite a favorable impact on their perceptions of advisors compared with only 12% who say the DOL rule has had a negative influence. Among advised investors (those currently working with a financial advisor), the net positive change is +10.

Investor Perceptions of Financial Advisors

With regard to the future of the ruling, half of affluent investors oppose repeal of the DOL fiduciary rule, in contrast to the 6 in 10 financial advisors who support repeal. While investors do not directly control the outcome of the DOL fiduciary rule decision, they are already weighing in on whether they want to work with an advisor in the future who is a fiduciary. In fact, 35% of advised investors say they would work with a fiduciary advisor only and 40% report that a fiduciary would be their preference—a resounding preference for working with advisors who put client interests ahead of their own and are transparent about the cost of fees and commissions.

Regardless of whether the DOL fiduciary rule goes into effect, we have already seen its positive impact on investor perceptions of financial advisors. Likewise, there is tremendous opportunity for advisors to differentiate themselves in a crowded and fiercely competitive market by getting a jump on client communications and reassuring investors that investor needs and interests are and have always been a top priority. While financial advisors may not want the headache of complying with another rule, highlighting fiduciary responsibilities and behaviors to prospects can only help strengthen advisors’ positioning when prospects consider whom to trust to help manage their investable assets.

Want to know more about the impact of the DOL fiduciary rule on affluent investor perceptions of financial advisors? In a new report this year, we’re exploring how exterior factors like the DOL fiduciary rule, US politics, terrorism and geopolitical events as well as overall deteriorating trust and different approaches to managing assets are effecting the way investors and advisors build and maintain their relationships. Download and overview of the report below to learn more.


This entry was posted in Financial Services, Product Development and tagged , , , by Julia Johnston-Ketterer. Bookmark the permalink.
Julia Johnston-Ketterer

About Julia Johnston-Ketterer

Julia Johnston-Ketterer is a senior director in the Syndicated Research division. She has more than 15 years of experience leading research initiatives on the client- and supply-sides of the financial services industry focusing on investors, advisors and broker-dealers. Prior to joining Market Strategies, Julia was vice president of business development for Market Probe, Inc. and research associate for Richard Day Research, where she managed financial services clients and conducted client satisfaction studies and PR research programs. Julia also spent ten years at Fidelity Investments. While there, she built a research team that provided primary and secondary research to internal marketing and communications partners. Julia earned an MBA in finance and communications from Simmons School of Management and a bachelor’s degree in French and international relations from the University of Wisconsin-Madison. While she can claim having twice bungee-jumped in New Zealand, Julia’s current adventures outside of work include being a hockey mom, taking hikes with her dog and planning her next family beach vacation.

Leave a Reply

Your email address will not be published.