NAIFA Survey Finds DOL Fiduciary Rule Likely to Reduce Retirement Advice for Lower- and Middle-Income Consumers

A survey by the National Association of Insurance and Financial Advisors of its members found that many advisors believe the Department of Labor’s fiduciary rule affecting retirement products and services will damage their ability to serve their clients, particularly those who are lower- or middle-income clients.
 
According to the survey of 1,167 NAIFA members, more than 62 percent said the DOL rule will or probably will force them to stop serving some or all of their clients. An additional 11 percent said they were unsure whether the rule would force them to stop serving clients. The DOL rule is likely to spark an exodus from the market, as 16 percent said they will no longer provide any retirement plan products or services to individual or business clients.
 
Lower- and middle-income clients could be particularly hard hit by implementation of the rule. Nearly a quarter of the advisors (24.2 percent) said they will lose all of their lower- and middle-income clients, while 41.3 percent said they will lose some. An additional 17 percent said that they do not yet know how the rule will affect their ability to serve clients who are not wealthy.
 
“The DOL rule has a strong potential to be a very bad deal for consumers who are not wealthy, but who are trying to do the right thing for their families by preparing for the future,” said NAIFA President-elect Paul Dougherty. “Lower- and middle-income workers want and would benefit from the help of a professional advisor as they prepare for retirement, but they may find that help hard to come by under the DOL rule.”
 
Compliance costs to have ‘negative effect’ on business
 
Advisors expressed a strong belief that complying with the rule will increase their costs of doing business. Nearly half (49.5 percent) expect their compliance costs to go up significantly and an additional 29 percent expect costs to rise modestly, with 11 percent saying they are not sure.
 
Nearly all of the advisors foresee the rule having an impact on their ability to serve clients. The effects will be entirely negative, according to 56.7 percent of respondents, while 27.3 percent said the effects would be mixed. Only 3 percent said the effects are likely to be entirely positive.
 
“NAIFA members are dedicated to serving lower- and middle-income clients,” Dougherty added. “But much of this is out of the advisors’ hands. Several financial institutions have already said they will no longer provide retirement investment products because of DOL rule’s compliance costs. Others may follow suit or restrict their business to wealthier clients.”
 
 
  • Posted September 17, 2016 IN
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Comments
David H Kinder, ChFC
State Farm has already announced that starting in April, 2017 no one licensed in securities will be selling mutual funds or variable annuities... the DOL has already severely restricted retirement advice.
9/20/2016 9:17:30 PM