Distinct Differences in Adviser Opinions of Fiduciary Rule

Advisers responding to the recent fiduciary proposal have “distinct and divergent viewpoints about the rule.”

So says Mark Spina, executive vice president and head of U.S. intermediary distribution at Pioneer Investments, speaking about a survey of 875 advisers Pioneer conducted via a live webinar poll on April 30. The survey asked advisers three questions about individual retirement account (IRA) rollover business and their opinions about whether the fiduciary rule as proposed would help, hurt, or have no influence on their business and on investors.

One of the most interesting things about the survey answers was that most questions had no runaway response, showing “there was not a unilateral viewpoint on this topic,” Spina explains. “There is still such a balanced debate on the subject.”

The advisers were attendees of a webinar sponsored by Pioneer in partnership with Empower, fi360 and Drinker Biddle & Reath called “The New Fiduciary Proposal…It’s out and we’re talking about it.” The 875 advisers, although heavily weighted towards advisers at broker/dealers (B/Ds), spanned a diverse group of advisory business models, including wirehouse, broker/dealer and registered investment advisers (RIA). The panelists included Fred Reish, ERISA attorney at Drinker Biddle & Reath, and Blaine Aikin, chief executive officer at fi360. Bob Holcomb and Bill Harmon from Empower Retirement moderated the event.   

About 38% believe that the new fiduciary proposal will hurt their business. “Anytime you introduce change…advisers who have established practices, even if already using levelized comp, are likely to have to add additional processes to stay compliant,” Spina says. He also commented that those advisers who said it will hurt their business are likely concerned about their “key points of engagement with participants.” Education materials will be more closely scrutinized, which will make all the ways advisers interact with participants—whether to get them into the plan or to increase their deferrals—that much more complicated.

The 27% of advisers who believe the rule will be helpful to their business are likely to believe that because they already have business practices in place that reflect the best practices expressed in the rule. Spina says these advisers believe they have the “first mover advantage.”  About 21% of advisers said the rule would be a non-event and 14% of advisers weren’t sure of the effect to their business. 

When it came to the rule’s influence on investors, again there was no standout answer—though advisers were less likely to say it would be a non-event (only 8%), and more likely to select that it would help or hurt the investors. About 42%, said the rule would hurt investors, raising costs and limiting availability of advice, while 32% said it would help them by putting their interests first and driving better outcomes.

Spina suggests that as a follow-up, it might be interesting to determine what correlation there was between advisers answering a particular way to each question. For example, he says it is likely that those who think the rule will help their businesses will likely also think it will be helpful to investors, with the reciprocal also true that those who think their business will be hurt by the new proposal are likely to say investors will be hurt.

The advisers were also asked about whether, and how, their IRA rollover business would be changed. This area is likely the one question that affects advisers most completely, Spina says. While the percentage of all advisers who are retirement plan specialists is in the single digits, and advisers with some focus on retirement plans are in the low double digits—the percentage of advisers with IRA clients is vastly higher. About two of five advisers (42%) said there would be little or no impact to their rollover business, while 28% said it would have a moderate to high negative impact and 11% said there would be a moderate to high positive impact. About 19% are still sorting out the proposal’s implications, saying they don’t know.

Regardless of whether advisors decide to take on a fiduciary status or pursue a more education-based approach, Pioneer’s DCIO team will support them and bring in experts to help them navigate the changing fiduciary environment, Spina says.