Advisers Sound Optimistic Note in Fiduciary Survey

Most advisers feel they are making good progress on addressing the Department of Labor fiduciary rule, according to a Nationwide Retirement Institute survey.

A new Nationwide Retirement Institute survey finds the Department of Labor (DOL) fiduciary rule has most advisers expecting some changes to their business model, but the complete picture is still coming together.

According to the research, advisers understand they cannot respond unilaterally to the rulemaking, slated to roll into effect through 2017 and 2018, and so most indicate they are waiting to see their firms’ final compliance procedures before making their own adjustments.

“This is about where we thought it would be,” notes Kevin McGarry, director of the Nationwide Retirement Institute. “Firms are taking this seriously, but still have a lot to work through. As we move through the next 18 months, we anticipate shifts in product mix and levels of understanding and concern.” 

Nationwide polled 622 financial advisers for the survey, finding the vast majority (87%) expect near-term changes to how they do business. While advisers provided varied perspectives regarding how they plan to change their mix of products sold, the research shows 43% “may plan to expand services offered to more holistic planning and 26% may plan to focus on non-qualified accounts.”

“The survey insights show that advisers are considering a shift from a transaction-based business model to more of a service-oriented model,” McGarry said.

 NEXT: Advisers are eager to take action

According to Nationwide, just 42% of advisers say they are aware of their firm’s timeline for implementation or what training or support the firm will provide, while only one-third are already aware of their firm’s new compliance procedures.

“The Best Interest Contract Exemption (BICE) continues to be an area of great concern for firms and advisers,” researchers note. “Only 23% of advisers are aware of their firms’ plans with respect to adoption of the BICE to sell variable compensation products. At the same time, 78% identified the BICE as one of the greatest areas of impact to their business.”

“This data affirms what we’re seeing across the country,” McGarry concludes. “Firms are busy working through the new rule, figuring out what it means for their specific situation, and developing their game plan to implement by next spring.”

Additional survey findings show advisers consider themselves “at least somewhat knowledgeable about” the new fiduciary requirements (82%); products subject to fiduciary standards (76%); fee and compensation disclosure requirements (76%); the BICE (73%); what is considered advice versus education (69%); grandfathering provisions or conditions (64%); and levelized compensation requirements (64%).

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