At least they’ve still got Tom Brady.
A new survey from the Massachusetts Securities Division finds most advisors aren’t sure of how the 401k fiduciary rule will impact their business, or their obligations to clients.
The survey, conducted by an office overseen by high-profile Secretary of State William Galvin “suggests that Massachusetts-registered investment advisers are unaware that the fiduciary rule holds all advisers providing advice to Retirement Investors to an ERISA standard.”
Further, findings also show that “Massachusetts-registered investment advisers are largely unaware of the impact the fiduciary rule will have on their obligations to Retirement Investors.”
As the survey notes, under the DOL’s Conflict of Interest Rule:
- Fiduciaries must act in the best interests of their clients, manage plan assets prudently, and avoid conflicts of interest; and
- Fiduciaries are prohibited from self-dealing, representing interests that are adverse to the interests of a retirement investor, and from receiving compensation from a third party with respect to advice given on retirement accounts.
“The BIC Exemption, however, allows receipt of otherwise prohibited compensation for advice involving retirement accounts if one adheres to certain contract requirements and standards,” according to the survey. “The results helped the Division identify areas for training for Massachusetts registered investment advisers.”
The BIC Exemption requires advisors to have written policies and procedures designed to mitigate the impact of conflicts of interest. The responses indicated the following:
- 49% of survey participants do not have any specific written policies and procedures;
- 48% of participants have written policies and procedures;
- 2% of participants did not answer this question;
- 1% of participants indicated a yes and no response to this question; 6 and
- 2% of participants did not answer this question.
When asked to estimate the potential impact on their business if they entered into a BIC Exemption:
- 36% of survey participants indicated that they would not be impacted;
- 24% of participants indicated that they would be minimally impacted;
- 10% of participants indicated that they would be moderately impacted;
- 6% of participants indicated that they would be significantly impacted;
- 20% of participants were unsure of the potential impact; and
- 2% of participants did not answer this question.
Despite the data, many participants indicated that they were already fiduciaries, and thus were not sure how the new fiduciary rule would impact them.
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.
