The DOL had the public on its side as it released its long-awaited and debated proposed fiduciary rule on Wednesday.
A recent survey from Financial Engines finds 77 percent of those surveyed said they support legally requiring all financial advisors to put their clients’ best interests first when providing retirement investment advice. A similar amount, 73 percent of respondents, said they felt it was very important that all financial advisors be legally required to meet this standard.
The Financial Engines survey also shows just how confusing the financial services playing field can before retirement investors. Almost half (46 percent) of Americans mistakenly believe that all financial advisors are already required to put their clients’ interests first when providing retirement investment advice. Among those currently working with financial advisors, 41 percent said that they were not sure if their advisor was a fiduciary or not.
Part of this confusion may be fueled by industry jargon. For instance, only 18 percent of those polled said that they knew what it meant for a financial advisor to be a “fiduciary.”
The Financial Engines survey of 1,018 adults comes in advance of the widely anticipated “conflict of interest” rule from the United States Department of Labor. The rule could require all financial advisors who provide advice on retirement assets to serve as fiduciaries, legally required to put their clients’ best interest ahead of their own. Currently, financial advisors are legally permitted to steer retirement assets into investment funds that are not necessarily in their clients’ best interest but deliver commissions to the advisor. The new rule is expected to curb that practice.
“Our research shows that even if people may not fully understand the intricacies of who is a fiduciary and who is not, they have a clear preference for advisors who are legally required to put their clients’ best interests first,” said Christopher Jones, chief investment officer at Financial Engines.
“Financial Engines has served customers as a fiduciary for nearly 20 years. We have been supportive of the U.S. Department of Labor’s proposed conflict of interest rule because we feel it’s the right thing for both investors and the industry.”
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.
