A day before the Department of Labor will release the finalized version of its proposed fiduciary rule, a new study of retail financial advisors suggests it will have a negative impact beyond what opponents of the rule have suggested.

Over the more than five-year long regulatory process, Wall Street interest groups and other opponents of have argued the rule will negatively impact low-and-middle income Americans by pricing them out of the financial services market.

In attempting to make most advisors to 401(k) plans and all advisors to IRA accounts fiduciaries, the proposed rule strongly favors fee-based compensation structures.

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Commission-based sales would not be outlawed, according to the proposed version, but the extensive new disclosure requirements and the cost to comply with a new best-interest standard would make the cost to administer accounts with low-balances too expensive for providers, and consequently encourage them to stop servicing those accounts, say opponents of the rule.

What that threshold would be has been subject to debate, but a new survey from the LIMRA Secure Retirement Institute says that some advisors consider small investors to have less than $200,000 in assets, a higher threshold than previous speculation suggested.

LIMRA surveyed 523 brokers, 121 RIAs, and 360 dually registered advisors.

More than half—55 percent—said they will have to drop or turn away small investors and half said they will stop handling small rollover business when the rule is finally implemented.

Only 25 percent of RIAs said they would turn away small accounts, compared to 55 percent of broker dealers that said they would, according to a LIMRA spokesperson.

What is considered to be "small" varies by advisors, but LIMRA says generally, advisors consider accounts with less than $200,000 to be the baseline.

Previous LIMRA research shows that only 34 percent of consumers with under $250,000 in assets use an advisor, compared to 50 percent of consumers with $250,000 to $1 million, and 80 percent of consumers with assets in excess of $1 million.  LIMRA anticipates those under the $250,000 threshold to be most affected.

LIMRA's data also shows that nine in 10 so-called middle-market households (between $100,000 and $249,000 in investable assets) are enrolled in a defined contribution or IRA plan.

More than half of the advisors in the survey said the rule will discourage them from handling small rollover business. Counter intuitively, eight in 10 said they don't expect the overall volume of rollover business to be affected.

In a statement, LIMRA suggested that discrepancy suggests advisors will focus attention on larger rollover opportunities.

Only 45 percent of respondents said they will be more sensitive to fees in the new era, suggesting some may already operate fee-conscious practices. More than one-third—37 percent—said they will recommend passively managed investments more often.

One in four advisors said they expect to sell fewer annuities, while one in six said they will sell annuities to non-qualified assets—money not in 401(k) plans or IRAs, according to the study.

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Nick Thornton

Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.