The results found a correlation between fiduciary best practices and both assets under management and minimum account size.
Respondents in the top quartile of AUM (at least $150.1 million) scored best on the fiduciary index, with a score of 85. The second quartile (between $50.1 million and $150 million) scored an 81, while the lower two quartiles ($20.1 million to $50 million, and $20 million or less) scored 76 and 73, respectively.
A similar pattern existed regarding minimum account sizes, where the four categories range from more than $1.1 million to less than $50,000, and the scores were highest in the top two quartiles.
"Elevating the standard of care that the advisor is providing to the client deepens the relationship," Trone says, "and the advisor ends up managing a larger portion of the client's assets as well as lengthening the client relationship."
The survey didn't find much correlation between fiduciary scores and the number of clients reported by survey respondents.
Practice Areas
The survey categorized advisors by how they described their practice area--wealth managers versus retirement advisors versus financial planner--to get a sense of how these areas compared with each other.
That's relevant considering that the U.S. Department of Labor operates its own fiduciary standard for retirement plans under the Employee Retirement Income Security Act of 1974 (Erisa). The DOL's Erisa fiduciary standard is considered more stringent than the fiduciary standard for providing investment advice as spelled out in the Investment Advisers Act of 1940.
Advisors who described themselves as wealth managers scored an 80 on the index. That compares with a score of 76 for those who identified themselves solely as retirement advisors and a score of 72 for those who called themselves financial planners.
"I expected to see that the average fiduciary best practices index of retirement advisors to be significantly higher than that of wealth managers and financial planners," Trone says. He adds he's also surprised financial planners didn't score better on the survey index.
But Michele Warholic, managing director of examinations, education and talent at the Certified Financial Planner Board of Standards Inc., notes that the survey doesn't distinguish between the general definition of "financial planner" and professionals who've earned the CFP designation.