Fiduciary Fight: Older Adults Demand ‘Best Interest’ Financial Advice

Coming on the heels of the Labor Department’s proposed investment advice fiduciary rule, a new national survey reveals that older adults not only expect that financial advice will be in their best interest but believe that it should be a requirement.

The findings come via AARP, which conducted a nationally representative survey in December 2023 among adults ages 50 and older to determine how many expect professional financial advice to be in their best interest.

Not surprisingly, nearly all believe that it should be. In this case, the survey found that 9 in 10 (90%) older-adult respondents agree that—when giving investment advice to people with retirement savings accounts—financial professionals should be required to give advice in the best interest of the account holder.

Likewise, of those who have either already used a financial professional for retirement planning or expect to use one, roughly 9 in 10 (89%) say that they expect professional financial advice to be in their best interest, and a similarly large share (87%) say that they use professional financial advice to make important financial decisions.

One caveat is that the survey questions did not address the nuances between the existing rules and the SEC’s Regulation Best Interest, and were more generally focused on the Department of Labor’s proposed new guidance.

Retirement Planning

AARP’s survey also found that many rely on financial professionals for retirement planning. When asked whether they have ever used a financial professional to help plan for retirement, nearly 4 in 10 (38%) adults ages 50 and older have already used a financial professional to help plan for retirement, and roughly 3 in 10 (29%) expect to use a financial professional for this purpose within the next five years. 

Among those who have never used a financial professional to help plan for retirement, the most common reasons for not doing so are: 

• prefer to handle it myself (41%); 
• don’t have much retirement savings (35%); 
• don’t think I can afford a financial professional (30%); and 
• don’t know if I can trust financial professionals (20%).

Uncertainty Persists

Somewhat surprisingly, despite the widespread expectation that financial advice will be in their best interest, many of those who have used a financial professional for help with retirement planning admit that they actually do not know whether the most recent professional they used was required to give them advice in their best interest.

In this case, when asked whether they know if their financial professional was required by law to give advice that was in their best interest, nearly half (43%) of respondents admitted that they do not know, while 53% answered in the affirmative.

Meanwhile, in alluding to the Department of Labor’s proposed new rule concerning financial advice related to retirement savings accounts, the survey then asked respondents how they would feel if their member of Congress tried to overturn such a rule and how that might affect their likelihood of voting for them in the next election.[1]

Notably, two-thirds (66%) of respondents said they would be less likely to vote for their member of Congress if they were to overturn a rule that requires financial professionals to provide advice in the best interest of their clients.

As it turns out, a House Financial Services subcommittee has announced a hearing for next week to examine the Department of Labor’s proposed rule on the definition of investment advice fiduciary and its potential implications for retirement savings and access.

Interviews for AARP’s survey were conducted online and via telephone from Dec. 7–11, 2023, among 1,002 U.S. adults ages 50-plus in the Foresight 50+ Omnibus. Funded and operated by NORC at the University of Chicago, Foresight 50+ is a probability-based panel designed to be representative of the U.S. household population ages 50 or older.