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FA Survey: Client Best Interest Not Served by DOL Rule

August 22, 2017

Only 12% of advisors in a recent poll say the Department of Labor’s fiduciary rule is helping them do what the rule purports to require — serve the clients’ best interests.

Half of respondents say the rule is impeding them from serving their clients’ best interests, according to a survey of 600 financial advisors conducted by the Financial Services Roundtable from July 7 to July 12.

Thirty-three percent of advisors polled say the rule, which went into partial effect a month before the survey, has had no effect on their ability to serve the clients’ best interests and 5% aren’t sure of the effect, according to the survey.

In addition, 73% of advisors say the rule is impacting their work methods a lot or somewhat, although 12% say the rule’s had no impact and 15% say it’s not much, FSR says.

Most frequently, advisors cite an increase in paperwork and less time for clients as the biggest changes, according to FSR’s analysis of open-ended responses. Advisors also cite fewer small accounts, additional fees and fewer investment options among the main changes to their workflow as a result of the rule, FSR says.

And in the next six months to a year, advisors anticipate serving fewer small accounts, more paperwork, additional fees and fewer investment options, according to the survey. Some advisors also anticipate retiring or leaving the industry in the next six to 12 months, FSR found.


The survey also found that 43% of advisors whose average client’s net worth is below $25,000 will likely direct more clients toward a robo-advisor or have already done so, compared to 29% of the survey’s respondents overall.

Nonetheless, 58% of advisors say their clients haven’t complained about the impact of the DOL rule and only 35% have, according to the survey.

Earlier this month the DOL proposed extending the final deadline to comply with the rule, originally scheduled for January 2018, by 18 months. The FSR says a 24-month delay is more appropriate, to allow for further coordination between the DOL and the SEC, Finra and insurance regulators, according to Legal Newsline.

By Alex Padalka
  • To read the Legal News Line article cited in this story, click here.