Call it watching from afar. A majority of financial advisors say they are unfamiliar with details surrounding financial reform and its potential impact on their business and clients, according to a recent SEI Quick Poll. Nearly three-quarters of the advisors surveyed said they are either "somewhat familiar" or "not familiar" with the impact of financial reform; only 6% identified themselves as 'very familiar'. The survey also found that more than half (56%) of advisors have not discussed financial reform with their clients during the past year.
The results show that advisors have not closely followed financial reform in its various stages. Nearly half (41%) of advisors are "undecided and unsure" whether it will be good for the investment advisory industry. Additionally, only 11% felt that "investors are better protected and advisors are held more accountable." Furthermore, nearly half (43%) of advisors said they are undecided about whether financial reform will substantially change their business operations, sales process, and client retention strategies. Similarly, 40% of advisors said that they are undecided whether financial reform will substantially change how clients rely on their services.
"The advisor's time is stretched now more than ever, so it's not surprising they haven't really dived into [financial reform] yet," said Wayne Withrow, SEI Executive Vice President and Leader of the SEI Advisor Network. "It's our observation that this isn't due to a lack of interest, but rather a lack of time. They're focused on their clients and on making up the revenue they've so recently lost. It will take about a year to fully implement many of the provisions, especially at the SEC, so I think you'll see them address it over that time period. "
The majority of advisors surveyed (57%) indicated that financial reform received a disproportionate amount of attention from the government and that there are more pressing needs to be addressed. Only 13% of respondents said that it should have been made a greater priority.
"The good news for advisors in the independent channel is that this legislation will ultimately affect them less than those advisors in other channels," Withrow adds. "So in that respect they're ahead of the game. Most already have a fiduciary responsibility to clients, and they have to be very specific about how they report AUM, and those sorts of things."
None of the respondents who completed the survey are affiliated with the SEI Advisor Network.