Fiduciary standard a top driver for choosing an advisor;
Eight in ten advisors say fiduciary model will benefit their practice
The first phase of the Department of Labor’s (DOL) Fiduciary Rule went into effect recently, and while investors may not understand every nuance of the new rule, investors and advisors are clearly aligned on the importance of a fiduciary standard, according to the third annual Advisor Authority study conducted by Harris Poll and commissioned by Jefferson National, operating as Nationwide’s advisory solutions business.
Likewise, when investors choose an advisor and when advisors are building their practice, a fiduciary standard is a key consideration, according to the latest findings of this online survey of roughly 1,600 Registered Investment Advisors (RIAs), fee-based advisors and individual investors nationwide.
“The industry has been changing for years, as more advisors migrate toward a fee-based approach when providing advice, and as consumers desire more simplicity, transparency and choice in their financial products. It’s a powerful trend—and there’s no going back,” said Mitchell H. Caplan, leader of Nationwide’s advisory solutions business. “The new DOL Fiduciary Rule has been a catalyst for change across the industry and creates opportunity. As part of Nationwide, we are committed to ensuring the company can serve more advisors in the ways they prefer to do business.”
Investors Value Fiduciary
Year over year, Advisor Authority has shown that a fiduciary standard is consistently rated among the top three most important factors influencing an investor to work with an advisor. And as this year’s study shows, among investors currently working with an advisor, nearly half (48%) say they would stop working with their financial advisor if they learned the advisor is not required by law to serve their clients’ best interest.
But while the importance of a fiduciary standard is high among investors, awareness of the DOL Fiduciary Rule is low—at only 38%. And there are misperceptions. While the newly implemented Rule will require financial professionals to act as a fiduciary when advising clients on their retirement accounts, more than half of investors (59%) incorrectly believed that all financial advisors are already required by law to put their clients’ best interests first, including disclosing fees and conflicts of interest.
Fiduciary Standard Helps Advisors’ Drive Growth
The vast majority of advisors (84%) are aware of the DOL Fiduciary Rule. And like investors, advisors are bullish on the benefits of serving clients’ best interests. In this year’s study, more than eight in ten advisors (83%) agreed that a fiduciary model will benefit the growth of their practice, regardless of the status of the DOL Fiduciary Rule. Year over year, Advisor Authority’s findings show that just as a fiduciary standard is consistently rated a top driver influencing investors to work with an advisor, attracting new clients is consistently rated as advisors’ top driver of growth (53% in 2017, 56% in 2016).
Nationwide helps advisors serve a variety of client needs, whether working in a commission-based or fee-based model. The Nationwide Retirement Institute’s recently-launched DOL website provides resources for firms and advisors wrestling with the complexities of the fiduciary rule, such as identifying any new requirements as a fiduciary, taking a close look at the Best Interest Contract Exemption, understanding how the regulations may affect their business and how to address common client questions.
About Advisor Authority
The third annual Advisor Authority study explores the investing and advising issues confronting RIAs, fee-based advisors, broker/dealers and investors—and the innovative techniques needed for success in today’s complex market. It features a special focus on the most successful advisors and the most affluent investors. These latest findings are to be followed by a series of reports that will be released from July through year-end. To view more on perceptions of the DOL Fiduciary Rule, financial professionals can download our latest infographic: http://learn.jeffnat.com/advisor-authority-2017/DOL-infogram
The third annual Advisory Authority study was conducted online within the United States by Harris Poll on behalf of Jefferson National, now Nationwide’s advisory solutions business, from March 13 – April 7, 2017, among 779 employed financial advisors, ages 18+ and 817 investors, ages 18+ who are primary or shared financial decision makers with investable assets greater than $100K. Among the 779 financial advisors, there were 521 Registered Investment Advisors and 258 Broker/Dealers. Among the 817 investors, there were 208 Mass Affluent, 204 Emerging High Net Worth, 204 High Net Worth and 201 Ultra High Net Worth. Investors are weighted where necessary by age, gender, race/ethnicity, region, education, income, marital status, household size, investable assets and propensity to be online to bring them in line with their actual proportions in the population.
Results of this new research are compared to results from a similar March 2016 study conducted online by Harris Poll on behalf of Jefferson National among 683 employed Financial Advisors, including 440 Independent Registered Investment Advisors and 243 Broker/Dealers and among 733 Investors.
Respondents for this survey were selected from among those who have agreed to participate in Harris Poll surveys. Because the sample is based on those who were invited to participate in the Harris Poll online research panel, no estimates of theoretical sampling error can be calculated. A complete survey method is available upon request.
About Harris Poll
Over the last five decades, Harris Polls have become media staples. With comprehensive experience and precise technique in public opinion polling, along with a proven track record of uncovering consumers’ motivations and behaviors, Harris Poll has gained strong brand recognition around the world. Contact us for more information.
About Jefferson National
Jefferson National, now Nationwide’s advisory solutions business, is a recognized innovator of a leading tax-advantaged investing solution for RIAs, fee-based advisors and the clients they serve. Trusted partner to a network of over 4,000 advisors, Jefferson National provides greater efficiency, transparency and choice through an adaptable technology platform, award-winning distribution strategy and cost-effective servicing capabilities. Named the industry “Gold Standard” as of 2012 and winner of more than 50 industry awards, including the DMA 2010 Financial Services Company of the Year. The company serves advisors and clients nationwide, through its subsidiaries Jefferson National Life Insurance Company and Jefferson National Life Insurance Company of New York. To reach our advisor support desk, please call 1-866-WHY-FLAT (1-866-949-3528). To learn more, please visit www.jeffnat.com.
Nationwide, a Fortune 100 company based in Columbus, Ohio, is one of the largest and strongest diversified insurance and financial services organizations in the U.S. and is rated A+ by both A.M. Best and Standard & Poor’s. The company provides a full range of insurance and financial services, including auto, commercial, homeowners, farm and life insurance; public and private sector retirement plans, annuities and mutual funds; banking and mortgages; excess & surplus, specialty and surety; pet, motorcycle and boat insurance. For more information, visit www.nationwide.com.