For the last six years, the debate over a Labor Department regulation to raise investment advice standards for retirement accounts has been conducted mostly among regulators, lawmakers, industry officials and financial advisers.
Now the people the regulation targets — investors — are getting into the conversation.
The process of taking fiduciary duty to Main Street was boosted by a segment on the HBO comedy program “Last Week Tonight with John Oliver.” Mr. Oliver applied his signature brand of mordant satire to a topic mostly discussed — and fiercely contested — in technical terms by industry insiders.
Previously, the topic had been considered too complicated or boring for the average person to understand. But that might be changing. Charles Schwab announced last week that it was launching a major advertising campaign on fiduciary aimed at investors, the first of what could be many such campaigns over the next year. The topic is also increasingly being addressed in general interest newspapers such as the Minneapolis Star Tribune and The New York Times.
The day after John Oliver's show, Investopedia saw a significant increase in page views for articles about fiduciary duty.
On his program, which aired June 12, Mr. Oliver used humor to lambaste what he called hidden charges embedded in a 401(k) plan the production company for his show negotiated with insurer John Hancock, a spokeswoman for whom denied that it was leveling excessive fees. He also highlighted how high fees can eat away at retirement savings.
Hitting the same talking points the Obama administration has used to promote the DOL rule, which would require financial advisers to act in the best interests of their clients, Mr. Oliver made the case for fiduciary duty with a common touch usually lacking in presentations by government and industry.
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The profile of the topic was enhanced not just by exposure on HBO but through the millions of hits the segment has received on YouTube — and its ripple effects.
“I think the John Oliver video has been a true tipping point,” said David Siegel, CEO of Investopedia, an online financial-information resource for investors.
Last Monday, the day after the HBO broadcast, Investopedia experienced a significant increase in the number of page views for articles about fiduciary duty and fees. For instance, an article entitled “An introduction to fiduciary advisors” received 256 page views, up from an average of 15 over the prior week.
“The increase in demand has been maintained,” Mr. Siegel said.
Advocates for higher standards for investment advice are thrilled.
“John Oliver is the greatest thing that has ever happened to the fiduciary cause,” said Randy Bruns, a private wealth adviser at HighPoint Planning Partners. “It's wrapping entertainment around it. It's wrapping humor around it.”
The ad campaign launched by Charles Schwab's custody unit, Schwab Advisor Services, is touting the virtues of financial advisers who put their clients' interests ahead of their own. The campaign will include videos and will appear on social media, paid search channels and online media sites including the Wall Street Journal, Barron's, Forbes, The Economist, CNNMoney, MarktWatch and Business Insider.
Other companies and organizations also considering public campaigns around RIAs and fiduciaries include TD Ameritrade, the National Association of Personal Financial Advisors and the Investment Advisor Association.
The topic also is making its way into general interest media. Rep. Tammy Duckworth, D-Ill., wrote an op-ed supporting the DOL rule in a recent edition of The New York Times. She highlighted the example of constituents who have been hurt by conflicted advice in a piece headlined “Isn't honesty the best policy?”
The Minneapolis Star Tribune also recently ran a column called “Why your financial adviser needs to be held to highest standard.” The piece ends with this call to action: “If you plan on using an adviser, ask them: 'Are you held to the fiduciary standard?'”
Apart from the increased attention the topic is getting on Main Street, the important question is whether investors who have greater awareness of what fiduciary duty means will start demanding it from their advisers. If that is the case, regulation or no regulation, the industry will need to meet the demand or get left behind.
“The portion of prospective clients who are calling us because we're fiduciaries has been on the rise,” said Dave O'Brien, founder of Evolution Advisers.
He's noticing a difference in the language. Clients used to focus on the fact that he's fee-only.
“Now they know the word 'fiduciary,'” Mr. O'Brien said.
"There's still a long way to go before people achieve a healthy level of financial literacy."-- David Tittsworth, former CEO of the Investment Adviser Association
Kate McBride, chairwoman of the Committee for the Fiduciary Standard, said investment advisers have told her that clients are specifically asking for fiduciaries.
“In all the time I've been working on the fiduciary issue, I've never heard of that before,” Ms. McBride said.
In addition to Mr. Oliver's segment and industry advertising campaigns, media coverage of the DOL rule has spiked since the final regulation was released in April.
And with a steady stream of popular movies about malfeasance in the financial sector hitting the public over the last few years, the message that Americans need to be able to trust the adviser they hire is starting to coagulate.
But even with the increased attention, name identification for fiduciary duty is growing slowly.
Jon Ulin, managing principal at Ulin & Co. Wealth Management, a branch office of LPL Financial, said most clients remain oblivious to the DOL rule.
“We spend a few minutes in every meeting with prospects and clients alike, explaining the differences between the fiduciary and suitability standards to add value, transparency and trust in our relationships,” Mr. Ulin wrote in an email. “I don't see investors any time in the near future asking their prospective adviser if they are a fiduciary until this language and behavior becomes the norm.”
'A LONG WAY TO GO'
A 2008 study by the RAND Corp. said investors were confused by the differences between investment advisers and brokers. David Tittsworth, former CEO of the Investment Adviser Association, said awareness of advice standards is just beginning to rise.
“There's been progress, but there's still a long way to go before people achieve a healthy level of financial literacy,” said Mr. Tittsworth, currently counsel at Ropes & Gray.
It may take another severe market downturn before most investors shop for advisers based on the standard to which they adhere.
“It will really hit the mainstream when there's a reason to look at your statement again,” Mr. Bruns said.
"The John Oliver video has been a true tipping point."--David Siegel, CEO of Investopedia
Results are more important than nomenclature, according to Anthony Domino, managing director of the Association of Benefits Consultants.
“Most investors have demanded and expected that advisers have the investor's best interest at heart,” Mr. Domino said. “I don't know that they want fiduciary. They want what it does.”
But with a greater effort to take the message straight to the public with clear, concise terms, more demand for the fiduciary label may come in the future.
“Education and research happens before action,” Mr. Siegel said. “Inevitably, that research will lead to direct questions and conversations with financial advisers.”
Clients already are becoming more sophisticated about how financial advisers charge them, according to Mr. Bruns.
“Consumers are getting a lot smarter,” he said. “If you're going to be an expensive financial planner, you better be ready to justify that.”
Even armed with more information and motivated to find the best advice, consumers will not be able to change industry practices on their own. Regulatory action is still required, Ms. McBride said.
“The DOL rule levels the playing field so that this can happen,” she said. “I don't think investor demand goes far enough without the underpinning of regulation.”
Both those who applauded and booed Mr. Oliver's segment said it could make a difference.
“It's the beginnings of an important conversation about the value of a fiduciary and the role a fiduciary can play,” said Mr. Domino, who added that Mr. Oliver's take was not “fair and balanced.”
Liz Skinner contributed reporting to this story.