In fact, 91 percent of respondents in a recent survey by the National Association of Insurance and Financial Advisors said they already have experienced or expect to experience restrictions on product offerings to their clients. In addition, nearly 90 percent believe consumers will pay more for professional advice services, and 75 percent have seen or expect to see increases in minimum account balances for the clients they serve.
In another survey submitted to the DOL by insurance service providers, 70 percent of respondents already have or are considering exiting the market for small-balance IRAs and small plans, and half are preparing to raise minimum account requirements for IRAs.
Several surveys of advisors showed that an average of 71 percent will stop providing advice to at least some of their current small accounts given the risk and increased costs of the rule; 35 percent of advisors will stop serving accounts under $25,000, and 25 percent will raise their client minimum account thresholds.
In a comment from a large mutual fund provider, the provider said, “The number of orphaned accounts nearly doubled in the first three months of 2017, and the average account balance in these orphan accounts is just $21,000. Further, it projects that ultimately 16 percent of the accounts it services will be orphaned this year because of the fiduciary rule.”
Furthermore, the chamber says, 92 percent of firms have indicated their retirement plans could limit products for retirement investors, leaving 11 million households with fewer choices. Fees for investors could increase by 200 percent, costing investors $109 million over 10 years.
“Unfortunately for the millions of Americans who rely on the private savings market for their retirement, our concerns are coming true,” the Chamber of Commerce says. “The theoretical academic exercises underlying the rule are giving way to hard evidence, and the evidence is coming in showing that the rule is harming American investors. This new data, based on actual experience, demonstrates that the DOL’s original predictions were wrong.”
The chamber says it will continue to work “with the DOL, Congress and the Securities and Exchange Commission to develop an alternative and permanent solution that will restore the ability of Americans to save for a dignified retirement.”