While the debate rages on in Washington about imposing a fiduciary standard on more advisors, a significant portion of advisors think the term is useless because the public does not understand what it means.
That’s the finding of a recent survey conducted by CLS Investments LLC, an Omaha, Neb., third-party money manager and manager of exchange-traded fund portfolios, and MarketCounsel, a regulatory compliance consulting firm.
Thirty-seven percent of 202 advisors surveyed by the firms say the term “fiduciary” is meaningless because the public doesn’t understand it.
Eighty percent of the advisors polled identified themselves as fiduciaries, meaning they put clients’ interests first, but a majority of that group (83%) say a fiduciary standard is not applied consistently throughout their organization.
Another significant number of advisors (39%) feel the regulatory language, definitions and standards now in place for those held to a fiduciary standard are not clear. The new standard being considered by the U.S. Department of Labor for advisors who work with retirement plans has been criticized for being too complicated.
Twenty percent of advisors who consider themselves fiduciaries do not use the term in promoting their business. Of those who do use the term as a marketing tool, 90% prefer to use it in discussions with clients rather than use it in marketing material.
“Advisors seem to be willing to de-emphasize that distinction, presumably after determining that the likelihood of further confusion to prospects and clients outweighs the benefits of the term,” said Brian Hamburger, president and CEO of MarketCounsel.