SURVEY SAYS: Effect of Fiduciary Rule

Last week, we asked NewsDash readers about the Department of Labor’s fiduciary rule proposal. Although we received many out of office replies, explaining a lower response rate than normal, there were a number of interesting responses. Asked about familiarity with the DOL’s proposal, most respondents (68.75%) said they were somewhat familiar. Almost one-fifth (18.75% were very familiar) and only 12.50% were slightly familiar. No one selected the “not at all familiar” response.

Respondents were nearly evenly split about level of concern about whether the proposal could increase plan sponsor regulatory burdens and costs.

When asked whether people are concerned that the proposal could increase plan sponsor regulatory burdens and costs, 12.50% each said “Our plan is small, and I’m not concerned” and “Our plan is small, and I am concerned” while 18.75% each said “Our plan is mid-sized, and I’m not concerned,” “Our plan is mid-sized, and I am concerned,” “Our plan is large, and I’m not concerned,” and “Our plan is large, and I am concerned.”

A question asking whether NewsDash readers are concerned the proposal could negatively affect the education or advice their plan’s participants again reflected similar splits, with slightly more answering “Our plan is large, and I’m not concerned.”

Answering the question “Are you concerned that the proposal could negatively affect the service your plan gets from a plan adviser?” showed a little more plan sponsor concern in the mid-size space, and less in the large plan space. 12.50% each said “Our plan is small, and I’m not concerned,” “Our plan is small, and I am concerned,” “Our plan is mid-sized, and I’m not concerned,” and “Our plan is large, and I am concerned.” One-quarter (25%) of respondents each said “Our plan is mid-sized, and I am concerned” and “Our plan is large, and I’m not concerned.”

With the smaller response rate, there were also fewer verbatim comments and most concurred that the rule will not create havoc in the industry.

“It would cut the personal relationship between and investor and there investment manager greatly. we have way to many regulations now leave us alone!”

“It’s not any more clear than it was before so in the words of Rhett Butler: ‘Frankly, my dear, I don’t give a dam#.'”

“I realize that there may be some wrinkles to be ironed out on this matter, but the basic premise of requiring advisers to act as a fiduciary is sound.”

“Of course everyone likes sound bites about mom and apple pie, but the devil is in the detail. Despite the PR sound bites about the proposal just being a best interest standard, the practical implications will eliminate useful education, and treats individuals and small plan sponsors like morons who can’t identify a sales pitch when they hear one. Classic nanny state attitude from the government.”

“The main concern is that less savvy plan participants won’t be able to get the advice they need to effectively save and invest for retirement. They aren’t likely to pay for an investment adviser.”

“I’m always concerned where the government gets involved. All this compliance drives up costs, not to mention it drives me crazy!”

“After all the hand-wringing, the financial services industry will adapt. it’s a market economy….”

“The solution seems simple, but life never is. If the financial services industry doesn’t like the proposal, why can’t they propose something that works…but that also raises the bar for brokers and others to a level that is equitable for their customers?”

“I find that few of my peers are concerned about this proposal, and more’s the pity. This isn’t labeled an “executive order”, but it’s an executive branch overreach as significant as anything this Administration has attempted to date. I can almost hear them saying “if you’re working with an advisor, you’ll get to keep your advisor – and it will cost less.” Yeah, right.”

NOTE: Responses reflect the opinions of individual readers and not necessarily the stance of Asset International or its affiliates.

Thanks to everyone who participated in the survey!