NEW YORK (MainStreet)As the Department of Labor prepares to issue new rules that could expand a "client-first" standard of financial care for retirement investors, a new survey says most financial advisors favor the more-stringent guidelines.
More than three-quarters (79%) of advisors support an ERISA fiduciary standard for advice to investors on rollovers from 401(k) and IRA retirement accounts, according to the fi360-ThinkAdvisor Fiduciary Survey. Currently, advisors can be exempt from the more stringent standard under certain conditions.
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Some financial services companies are lobbying against the requirement that brokers put investors' interests first, rather than adhering to the more lax "suitability" standard. The Securities and Exchange Commission is also considering expanding the fiduciary standard to advisors to retail investors.
"Extending the fiduciary standard in both of these regulatory areas to broker-dealers that service qualified plans and retail investors would have a dramatic effect on the regulatory landscape by increasing disclosure of conflicts of interest and mandating a 'best interest' standard across the securities industry," the report claims.
Opponents have argued that the fiduciary standard would increase investors' costs and limit their access to advice and products. But survey respondents said extending the fiduciary standard to brokers: would not cost investors more for advice (79%), would not price investors out of the market for advice (69%) and would not limit access to advice or products (68%).
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"This support for the fiduciary standard for retirement investors, coming from registered reps and investment advisors across the spectrum of business models is very compelling," said Blaine Aikin, President of fi360. "Once again, the majority of professionals understand that putting the best interests of their clients first is in their long-term best interests as well and has become a competitive necessity."
Nearly all (97%) of the survey respondents believe that investors are unaware of the differences between the fiduciary standard governing investment advisers and the suitability standard used by the brokers.
A majority of advisors surveyed said the ERISA fiduciary standard that applies to advice to retirement investors in 401(k) accounts should also apply to IRAs (72%) and rollovers from 401(k) and IRA accounts (79%). And 61% agree that the Labor Department should expand the number of advisors who are considered fiduciaries.
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"Though regulators may still be considering whether and how to impose a fiduciary standard on advice givers," said Jamie Green, group editorial director for Summit Business Media's ThinkAdvisor, "many advisors are already putting their client's interests first, whether or not they have a legal obligation to do so."
--Written by Hal M. Bundrick