While industry associations have been active in arguing both for and against the Department of Labor's proposed fiduciary rule, one survey set out to gauge stakeholders directly on specific provisions of the proposed rule and their consequence on product and service distribution.
DST kasina, which provides data services to the asset management industry, and has a defined contribution service provider arm, surveyed a pool of about 100 RIAs, service providers, third-party administrators, and asset managers on how they see the rule's primary proposals affecting the retirement industry.
About 65 percent expect the rule's overall impact to be "medium" to "high"—the rest said the rule's impact will be low, if any at all.
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While several points of the survey portrayed stakeholders' uncertainty over specific provisions' impact, other areas forecasted clearer consequences.
RIA fiduciaries stand to benefit, according to the survey.
Other prognostications have indicated as much. But the DST survey specifically asks what the rule will mean for providers to plans with more than 100 participants.
The proposed rule's so-called "seller's carve-out" allows advisors to plans that size to operate under the proposal's Best Interest Contract Exemption provision.
The seller's carve-out gives some latitude to advisors of larger plans that advisors to smaller plans won't have under the proposed rule.
Sponsors of larger plans have internal fiduciary capabilities significant enough to protect plan participants, and therefore advisors to those plans should have less fiduciary exposure, or so says the DOL in rationalizing the seller's carve-out.
In spite of that exemption, nearly all of the respondents in the DST survey—about 87 percent–said they would still distribute services through advisors that take on fiduciary status and level compensation for large plan clients.
For smaller plans with fewer than 100 participants, about 63 percent of respondents said they would work through fiduciary RIA advisors to service sponsors and participants.
And almost 26 percent said they are holding out hope that the DOL will revise the seller's carve-out and extend some exemptions to smaller plans.
About 7.5 percent of the respondents said they would no longer service plans with fewer than 100 participants as a result of the DOL's proposed rule.
Opponents of the rule, specifically the U.S. Chamber of Commerce, continue to argue that the rule's seller's carve-out would disincentivize advisors from servicing smaller plans.
Most respondents in the DST survey—about 47 percent—expect broker dealers to move to fiduciary 3(38) models, while another 34 percent expect broker-dealers to utilize the Best Interest Contract Exemption, the disclosure provision for commission-based compensation.
About 19 percent of respondents expect broker dealers to no longer service retirement plans.
Nearly 61 percent expect the rule to have less than $1 million impact on their businesses, while more than 26 percent expect the rule to cost their firms between $1 and $10 million; roughly 13 percent expect the rule to impact more than $10 million in revenue.
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