New Survey Results Will Help the SEC Understand Fiduciary Impacts
The American College of Financial Services and the National Association of Insurance and Financial Advisors (NAIFA) Release Findings of New Financial Advisor Survey
NAIFA VP of Communications and Marketing
For The American College of Financial Services:
FALLS CHURCH, VA and BRYN MAWR, PA (June 28, 2013) — A new survey of financial professionals by the National Association of Insurance and Financial Advisors (NAIFA) and The American College of Financial Services reveals important concerns on the part of registered representatives and dual-registered advisors about the potential implementation impacts of a new fiduciary rule. Of those surveyed, 84 percent believe their costs of doing business will increase under a uniform fiduciary standard, and 77 percent expect to pass at least some of that increase along to retail investors.
NAIFA and The American College of Financial Services conducted the survey through outreach to members, alumni, and publicly available lists of registered representatives, investment advisors, and dual-registered advisors. The survey was conducted in response to the Securities and Exchange Commission’s request for data as it conducts a cost-benefit analysis to determine whether a uniform fiduciary rule applying to both registered representatives and investment advisors is warranted, and if so, what that rule should entail.
“We are an accredited educational institution,” said Larry Barton, PhD, CAP® of The American College of Financial Services. “We believe more information of this type will help the SEC make better regulatory decisions. This issue is challenging and highly charged, but in the end, all of us want a solution that is in the true best interest of retail investors.”
“NAIFA members protect the financial interests of American families throughout the country,” said NAIFA CEO Dr. Susan Waters. “We are pleased that along with The American College we are able to offer the SEC data that will help them as they consider whether to propose a fiduciary duty for registered representatives and, if they decide to move forward, what such a rule might include.”
According to the survey, 46 percent of registered representatives and dual-registered reps indicated that if the SEC were to implement a uniform fiduciary standard, they would most likely shift their customer mix to higher-income clients. Respondents were able to select multiple strategies they would pursue, and 39 percent said they would increase prices, while 35 percent said they would offer a more limited range of products.
Interestingly, when asked the most common selection factors retail investors express when selecting a professional for advice, advisors across all models (registered reps, dual-registered advisors, and investment advisors) responded with similar answers. The results strongly indicate that there should be a place for all existing client-facing models within any new framework the SEC develops.
Other key findings of the NAIFA-The American College of Financial Services survey include:
- 99 percent of registered representatives are compensated at least in part by commissions on product sales, as are 93 percent of dual-registered advisors.
- Registered representatives most commonly sell or recommend mutual funds (89 percent of respondents), variable annuities (83 percent), 529 college plans (63 percent) and variable life insurance (62 percent).
- 91 percent of registered representatives serve investment clients with an average household income of less than $250,000; 47 percent serve investment clients with average household incomes of less than $100,000. For dual-registered advisors, 86 percent serve investment clients with an average household income under $250,000, and 30 percent serve those with an average household income under $100,000.
- 53 percent of registered representatives and 32 percent of dual-registered advisors say the majority of their securities clients have portfolios of $100,000 or less. Some 83 percent of registered reps and 63 percent of dually registered advisors say the majority of their securities clients have portfolios of $250,000 or less.
About the Survey
NAIFA and The American College of Financial Services conducted a web-based survey of financial advisors May 20-29, 2013. Results are based on responses from 2,419 respondents who said they currently sell or recommend securities to clients.
About NAIFA: Founded in 1890 as The National Association of Life Underwriters (NALU), NAIFA is one of the nation’s oldest and largest associations representing the interests of insurance professionals from every Congressional district in the United States. NAIFA members assist consumers by focusing their practices on one or more of the following: life insurance and annuities, health insurance and employee benefits, multiline, and financial advising and investments. NAIFA’s mission is to advocate for a positive legislative and regulatory environment, enhance business and professional skills, and promote the ethical conduct of its members.