Brokers and Investment advisers indicate strong support for the Department of Labor ERISA fiduciary standard, according to a report from fi360, which oversees the AIF and AIFA designation programs, and FiduciaryPath, titled “Seeking Trusted Advice for Individual Investors.”
While they admittedly have a dog in the hunt, the study, released April 7, is particularly timely as the White House calls on the Department of Labor to propose fiduciary rules for advice to retirement investors. The rules have not yet been made public, but are intended to update decades-old ERISA regulations and eliminate conflicts of interest that harm investors and their retirement nest eggs.
In early April, the chair of the Securities and Exchange Commission, Mary Jo White, said the SEC should extend the fiduciary standard to brokers, based on the fiduciary principles in the Investment Advisers Act of 1940. Those principles govern investment advisors’ fiduciary duty to place investor’s interests before their own or their firm’s interests. Brokers generally do not have a fiduciary duty to clients and can place their own or their firm’s interests ahead of the investor’s.
The fiduciary standard under ERISA is even more rigorous than in the Investment Advisers Act of 1940. More than seven out of ten of survey participants agree in concept with the Labor Department’s plan to propose a rule that would cause intermediaries to be considered fiduciaries under ERISA. Additionally:
- 91% say “yes,” the fiduciary standard should apply to advice to investors on rollovers from 401(k) accounts to IRA accounts. That’s up from 79% in 2013.
- Nearly 82%, up from 72% in 2013, say the same fiduciary standard that applies to 401(k) accounts should also apply to advice on IRA accounts.
“Advice is an inherently fiduciary function,” fi360 CEO Blaine Aikin said in a statement. “We are pleased to see that most practitioners feel the same. In the end, the conversation around fiduciary is about fairness and transparency in the marketplace.”
“Survey findings indicate many intermediaries who do not have to place their client’s interests before their own, want to do so. And it’s surprising how strong support is for the tougher ERISA fiduciary regulations and for the fiduciary standard for rollovers from 401(k)-type accounts to IRAs,” added KathleenMcBride, AIFA®, founder of FiduciaryPath, LLC, and editor of the survey. “Advice on rollovers into IRAs is particularly important, because it is a vulnerable point for many retirement investors.”
The full report is available at http://www.fi360.com/uploads/media/2015fiduciarysurvey.pdf.
See Also:
- ETFs Top Mutual Funds With Financial Advisors
- How 401k Advisors Capitalize on Change
- Labor Department Opens Public Comment Period on Fiduciary Rule
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
