Despite an Uncertain Fate, DOL Fiduciary Rule Leaves Its Mark

Insights Powered by Cogent Reports™     

A Shift Toward Level Compensation for Commission Products Is Likely to Shape the Future Product Landscape

While the regulators in Washington, DC, continue to kick the can down the road, there’s no doubt that the DOL fiduciary rule is prompting changes in advisors’ practices. As previously reported, advisors are moving further toward fee-based compensation, and predominantly fee-based advisors and RIAs are the only advisor segments that are growing.

Recent research with variable annuity (VA) producers further supports the trend of changing compensation models. Nearly half (44%) of VA producers agree that their firm is encouraging a level compensation structure that does not vary with the particular investment recommended. This proportion climbs to more than half in the National and Bank channels (56% and 57%, respectively). As a result, advisors expect to allocate fewer new dollars to VAs going forward, with one-third of advisors looking instead to the best interest contract exemption for commission products.

Impact of the DOL Fiduciary Rule_VA Producers

As VAs often serve as a top source in advisors’ retirement income planning, this expected shift away from variable annuities is leaving a gap and creating an opportunity for new solutions. In fact, generating income in retirement tops advisors’ list of desired thought leadership topics, further highlighting advisors’ need for innovative investment products and strategies that fit within shifting compensation models. While insurance companies are most likely to be top-of-mind for retirement income products, asset managers have an opportunity to attract dollars moving away from annuity products by demonstrating their distinct retirement income product benefits and highlighting potential advantages over annuity offerings.

 

For more information on the Variable Annuity Brandscape™, review an overview of the report.

Review an Overview of the Full Report

This entry was posted in Brand and Messaging, Financial Services, Product Development and tagged by Meredith Lloyd Rice. Bookmark the permalink.
Meredith Lloyd Rice

About Meredith Lloyd Rice

Meredith Lloyd Rice is a vice president in Market Strategies' Syndicated Research division. She manages the firm’s syndicated research products focused on the financial advisor market and is the lead author of the Advisor Brandscape® report. She has more than 15 years of experience managing research initiatives in the wealth management industry and has explored a wide range of business issues on the client and supplier side. Prior to joining Market Strategies, Meredith was an associate VP at Chatham Partners where she oversaw a team of researchers and managed the overall design, analysis and interpretation of large-scale studies for institutional financial services clients. Meredith earned an MBA from Thunderbird School of Global Management and a bachelor’s degree from Colgate University. She is a former collegiate rower who now gets her exercise chasing after her 2-year-old daughter and Clumber Spaniel.

Leave a Reply

Your email address will not be published.