Registered investment advisors overwhelmingly support a strong, universal fiduciary rule, while commission-based securities brokers don’t think it would do much to improve investor confidence, according to a fi360 survey.
This year’s results, extracted from polling done last summer, found that 71 percent of participants said they believed a fiduciary rule “no less stringent” than what is currently required of RIAs would help restore confidence in the financial industry, up from 59 percent who reported believing as much the previous year.
And 91 percent want the higher standard of care applied to rollovers from 401(k) accounts, while 82 percent said fiduciary standards applied to advisors to 401(k) plans should also be applied to marketers of IRAs.
Not surprisingly, support for a fiduciary rule drops precipitously with commission-only advisors: only 33 percent of the respondents think a new standard would result in improved investor confidence.
Still, overall, support for a fiduciary standard was higher.
Fi360, a technology and support firm, said this year’s survey was heavy on RIA participation, which may explain higher levels of support for a universal fiduciary rule.
Of the 609 participants, 85 percent were RIAs, or IRAs — independent advisors who may use broker-dealers for back-office support. That’s up considerably from the previous year, when only 53 percent of respondents represented the independent channel of advisors.
The survey was open to all brokers, investment advisers and insurance consultants and producers.
“The goal has been to encourage all types of financial or investment intermediaries to participate,” wrote Kathleen McBride, founder of Fiduciary Path, fi360’s partner in the survey, and author of an accompanying report.
Overwhelmingly, the participating RIAs said they are “fee-only” firms. Accounting for all of the participants in the survey, 81 percent reported receiving fee-only compensation.
Six percent of the registered reps (non-fiduciaries) in the survey said they only received compensation through commissions.
For those that do receive commissions, they can be significant: 20 percent of the registered reps said their commissions generate between $250,000 and $500,000 a year in revenue; another 9 percent said commissions generate more than $500,000.
Fee-only RIAs like their model; 99 percent said they would not change it.
Even non-RIAs report having a fiduciary relationship with their clients. Nine out of 10 non-RIAs said they maintain a fiduciary relationship with 90 percent of their clients, as opposed to merely a suitability standard for the advice they give.
Most of the commission-only sales people — 66 percent — said they maintain a fiduciary relationship with their clients, even though they are not required to.
All told, 91 percent of participants said they do not think requiring a fiduciary standard would raise costs to investors.
The survey said it includes such a question each year because “opponents of extending a fiduciary standard to brokers have made unsubstantiated claims that it costs investors more to work with a fiduciary.”
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