3ethos and Boston Research Group (BRG) are jointly conducting the first of what is to become an annual survey on the impact a "fiduciary standard" will have on the financial services industry.
The three-pronged survey will attempt to benchmark the best practices associated with a fiduciary standard, measure the rate of adoption of those practices by financial advisory firms and measure the impact adopting those best practices has on the success of an investment advisory practice.
Don Trone, founder and CEO of Mystic, Conn.-based financial think tank 3ethos, said the objective of the survey is to determine whether financial advisors are already adhering to the best financial management practices supporting a fiduciary standard.
"There's considerable friction on how fiduciary standards should be implemented by the SEC and DOL [Department of Labor], but there is industry-wide consensus that best practices associated with a fiduciary standard have been widely adopted by financial advisors, whether they acknowledge fiduciary status, or not," Trone said.
The biggest challenge says Trone -- discovered while interviewing survey panelists -- will be to clearly define what is actually meant by a "fiduciary standard."
"It would be inappropriate to try to define it in one dimension, such as by a legal definition," Trone said. "As a result, advisors who receive the survey will discover that we have defined the term 'fiduciary' in three dimensions; it's a unique approach that has not been attempted before now."
Warren Cormier, CEO of the BRG, a Boston-based financial services market research and consulting firm, predicted that the Financial Industry Regulatory Authority (Finra) member firms will be the primary beneficiaries of the survey. He said the results can be used to assist firms in redefining hiring and recruiting criteria, developing compliance and supervisory policies and developing training curriculum and learning objectives.
Mike Vien, global head of Business Advisory Services of WiPro, said it's critical that the industry "benchmark" the best practices associated with a fiduciary standard. "So we can begin to identify and build out the technology that will be required to support the practices," he said. "Of particular importance will be workflow applications to capture the details of the financial advisor's decision-making process."
The survey will be distributed to advisors in April, with the results being tabulated and correlated in May. A final report will be published in June.
Central to the design of the survey are questions that have been reviewed by a panel of industry experts who represent a broad spectrum of the fiduciary debate. They include David Bellaire,FSI, general counsel and director of government affairs; Bradford Campbell,U.S. DOL, former assistant secretary of labor for employee benefits security; Bill Chetney,LPL, executive vice president of Retirement Partners; Ron Hagan,Investment Fiduciary Leadership Council, founder and CEO; Martin Kurtz,FPA, past president; Elizabeth Piper/Bach,NADA Retirement Administrators, vice president and chief operating officer; George Revoir,John Hancock, senior vice president, retirement plan services; Skip Schweiss,TD Ameritrade Trust Company, president; Mark Tibergien,Pershing Advisor Solutions, CEO; Sean Walters,IMCA, executive director and CEO; and Gib Watson,Envestnet | Prima, group president.