Press release: <i>InvestmentNews</i>, Nationwide partner on new research on impact of fiduciary rule

InvestmentNews Research, in partnership with Nationwide, has launched a new research series that focuses on how financial advisors believe the Department of Labor’s Fiduciary rule will re-shape their business models and the retirement planning services they provide to clients.

The research initiative – “A new era of advice” – is based on a survey of the InvestmentNews audience of financial advisors and includes responses from more than 600 advisers across multiple channels and business models. The findings are revealed in two research papers and are housed on a new dedicated section of InvestmentNews.com, complemented by tools and resources from InvestmentNews Research and Nationwide. In addition, a live and interactive webcast revealing the findings from the research was held on November 15, 2016, and can be viewed here.

The first installment of the research project, which can now be downloaded here, surfaces both the challenges and opportunities that financial advisors believe the DOL’s fiduciary rule presents.

“While the conventional belief is that the regulatory environment will be more restrictive for advisors, and potentially less profitable, our research found that many advisors see a way to re-invent their businesses and services,” said Mark Bruno, associate publisher of InvestmentNews. “In particular, advisors see the rule as an opportunity to provide more comprehensive financial planning to more specific types of clients, and ultimately grow their businesses through premium fee-based services, such as retirement income planning.”

While a number of advisors noted that they initially expect their revenues to decline after the fiduciary rule is implemented in April 2017, 58% of advisors in the study noted that they have implemented on plans to offer holistic financial planning. Another 15% said they are planning to add such an offering in 2017.

Significantly, six in 10 said they have already moved to a more fee-based business model, according to the research, with an additional 23% saying they will move in that direction in 2017.

This comes in light of their belief that commission-based revenues generated by advisors, which accounted for 36% of total revenues in the first half of 2016, will decline to 23% of revenue once the Fiduciary rule is implemented next year. The full breakdown of revenues and projections from the research is illustrated in the infographic below:

“Firms and advisors are realizing the need to incorporate elements like the Duty of Loyalty and Duty of Prudence in the restructuring of their operations,” noted Carlo Cordasco, Jr., Vice President Nationwide Retirement Institute and presenter in the upcoming webinar.  “We’re seeing more and more advisors roll up their sleeves to understand the resources available to demonstrate the investment recommendations they’re making to their clients in alignment with the DOL rule.  We are proud to come alongside them to help navigate these required changes in our industry.” 

Notably, 60% said they already have started to focus on new niche markets or will do so in 2017. This will allow advisors to expand their markets and client base, at the same time that they look to place additional emphasis on premium services: In the post-DOL world, 25% of advisors said retirement income planning was the service that clients felt was most valuable to them, followed closely by the 24% of advisors who cited development of a financial plan as the most valued service. This is an area where advisors see an opportunity to re-position their services and re-inforce their value proposition to advisors.

“We are truly entering a new era of advice,” said InvestmentNews’ Bruno. “Investment management alone is not enough to differentiate, and more advisors are seeing the DOL rule as an opportunity to accelerate change in their models and provide deeper sets of services to their current and prospective clients.”

For more information, please visit InvestmentNews.com/newera

About InvestmentNews Research

The mission of InvestmentNews Research is to provide financial advisors with the industry’s most informative practice management studies and benchmarking reports. Our benchmarking studies are a leading source of market intelligence for advisory firms and industry partners, such as custodians, broker-dealers, service providers and professional organizations. In 2009, InvestmentNews acquired two bellwether benchmarking studies from Moss Adams LLP — the Advisor Compensation & Staffing Study and the Financial Performance Study of Advisory Firms. We continue to improve and expand these two critical industry studies, while we have also introduced new studies, such as this study on Elite RIAs, that support the growth and development of financial advisory firms.

For more information, please contact:

Mark Bruno
InvestmentNews
[email protected]
212-210-0116