As the applicability date of the Department of Labor’s fiduciary rule approaches, Americans overwhelmingly favor the rule’s chief intent, a new survey says.
According to “In Whose Best Interest? (Part 2),” a 2017 report from Sunnyvale, Calif.-based Financial Engine, 93 percent of Americans believe it’s important that all financial advisors be legally required to put clients’ best interests first when providing retirement advice.
The fiduciary rule would expand the conflict-of-interest restrictions already applied to advice within 401(k) plans to all retirement plans, including IRAs.
After it was delayed 60 days after its original April 10 applicability date, U.S. Labor Secretary Alexander Acosta wrote on Wednesday that most of the rule’s provisions will become applicable on June 9. Acosta’s statement effectively ends a two-year debate about the rule’s impact on the financial services industry and its effectiveness in protecting consumers.
Will consumers notice? More than two-thirds of the survey’s respondents, 68 percent, had never even heard of the fiduciary rule.
According to the Financial Engines survey, most consumers believe that they’re already protected from conflicted advice: 53 percent of the survey’s respondents mistakenly believe that advisors are legally required to put their interest first when making retirement investment recommendations, up from 46 percent in 2016. Only 21 percent could correctly identify the difference between a fiduciary advisor and a non-fiduciary advisor.
The survey respondents also said that they were likely to ask more questions about fiduciary advice in the future and act if their advisor was not a fiduciary. Only 12 percent said they would continue working with the same non-fiduciary advisor in the same capacity.
Almost a quarter of respondents, 23 percent, said they would switch advisors if they found out their current advisor was not a fiduciary, and another 18 percent said they would end their work with financial advisors if they were not receiving fiduciary advice.
A little more than half the respondents, 53 percent, felt that advisors should be regulated by the government.
Financial Engines commissioned ORC International to poll 1,025 adults 18 years of age and older in March.