While the fiduciary regulation may have been a front-and-center issue for advisors over the past couple of years, a new survey finds that most “regular” investors haven’t a clue.
The survey of retail investors, conducted by ORC International for the original robo-advisor Financial Engines, found that more than two-thirds (68%) of the respondents had not heard about the Labor Department’s fiduciary regulation. That said, nearly half (46%) thought that employers should be obligated to offer services only from advisors who are fiduciaries, though 39% “didn’t know.” The remaining 15% weren’t in favor of that obligation.
Compared to a similar survey last year, only about one in five (21%) respondents claim to have an understanding of the difference between an advisor who is a fiduciary and one who is not – though that was a slight improvement from the 18% who said so a year ago.
Even then, only 50% of those who work with a financial advisor are certain that their advisor is a fiduciary, while 38% admitted they didn’t know if their advisor is a fiduciary or not.
However, according to the survey, if investors discovered their financial advisor was not a fiduciary:
- 47% would ask more questions about their advisor’s investment recommendations;
- 23% would switch to another advisor; and
- 18% would stop working with a financial advisor altogether.
One in eight (12%) would continue working with the same advisor in the same capacity.
Not surprisingly, (nearly) everyone thinks advisors should put clients’ interests first – but more than half think they are already required to do so. Specifically, 93% (71% very important, 22% somewhat important) of Americans think financial advisors who provide retirement advice should be legally required to put their clients’ best interest first (same as a year ago).
However, more than half of respondents (53%) believe that all financial advisors are already legally required to put the best interests of their clients first – up from 46% a year ago. Of course, the vast majority of the respondents (78%) don’t currently work with an advisor, and just 12% work with an advisor or advisory service available through their employer.
All in all, it would seem that those who are already operating as fiduciaries have some education to do. And those who aren’t yet may have a little more time.