NAIFA Survey Gauges Impacts of DOL Fiduciary Rule

A new survey of 1,093 NAIFA members has found that the Department of Labor’s fiduciary rule is already hampering advisors’ ability to serve clients and is likely to increase consumer costs.
 
Nearly 46 percent of the advisors in the survey said they have already experienced restrictions in the types of products they can offer their retirement plan clients, and an additional 44 percent expect such restrictions. Twenty percent have had to increase their clients’ minimum account balances since the rule became final, and nearly 54 percent anticipate having to increase minimum balances.
 
Nearly nine out of ten advisors said they believe clients will need to pay more for their services because of the DOL rule.  Almost 80 percent said that confusion about the rule is impeding their ability to effectively serve clients.
 
As NAIFA conducted the survey, the DOL has implemented a 60-day delay for the applicability date of the DOL fiduciary rule so that the Department can review the rule. The White House has directed the DOL to determine if the rule has or will: reduce consumer access to retirement products, adversely affect investors or retirees, or increase “the prices that investors and retirees must pay to gain access to retirement services.”
 
NAIFA will provide DOL with the survey results to use in the review.
 
The rule is already having an impact on advisors’ compensation. The survey found that 43 percent of advisors have experienced reductions in the commission compensation arrangements, while an additional 49 percent expect reductions. One of NAIFA’s major concerns about the DOL rule is that it would force financial institutions to switch clients from commission-based to fee-based accounts for those clients to remain financially viable. Approximately 77 percent of advisors said that more than half of their retirement planning clients would see increased costs if they had to switch from commission-based to fee-based accounts. Of those advisors, 41 percent said that more than 80 percent of their clients would see increased costs if forced to switch.
 


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