They may not fully understand just what constitutes a fiduciary, or whether their own financial advisor is one, but the great majority of Americans want that advisor to be legally required to provide advice that is not touched by conflicts of interest.
That's according to a new survey from Financial Engines, which found that 77 percent of respondents said they would support legally requiring all financial advisors to put their clients' best interests first when providing retirement investment advice.
A similar amount, 73 percent of respondents, said they felt it was very important that all financial advisors be legally required to meet this standard. That highlights the controversy over the impending issuance of the Department of Labor's fiduciary rule, which will require advisors who provide advice on retirement assets to serve as fiduciaries.
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One hitch is that just 18 percent of Americans actually know what a fiduciary is, in the context of financial advisors.
Predictably, those with more money or who are better educated were slightly more clued in as to the definition—but that doesn't mean they're all that savvy either.
Adults earning over $75,000 per year and those with a college education, the survey found, were more likely than average to say they understood the difference between a financial advisor who is a fiduciary and one who is not a fiduciary (25+ percent and 30 percent, respectively).
And among those who work with a financial advisor, 41 percent don't know whether that advisor is a fiduciary or not.
Ironically, when asked, they're much more clued in to the fact that financial advisors are "not legally required to put your best interests first" when compared with the professions of doctor and lawyer. Sixty percent correctly identified financial advisors as not bound by law to put the client's best interests ahead of any others'.
But 46 percent don't understand that there's currently no law obliging financial advisors to act as fiduciaries, and that not all financial advisors are legally responsible for putting clients first when providing retirement advice.
Still, 55 percent responded that "the types of conflicts of interest posed by the commission pay structure" are "a bad thing for me," with older generations such as boomers more likely—at 66 percent—to say so than younger generations.
And an overwhelming 93 percent said it is important that all financial advisors be legally required to put their clients' best interest first when providing advice on retirement savings.
Considering that 74 percent of Americans are not working with a financial advisor, it was also impressive that 63 percent of respondents said they'd be more likely to work with one if they knew that advisor was legally obligated to put the client's best interests first.
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