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5 New Findings of the fi360-AdvisorOne Fiduciary Survey for 2013

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While the debate over whether to extend the fiduciary standard of care to all advisors who provide advice to individual investors continues in regulatory, broker-dealer and insurance company boardrooms, advisors in the field are skewing toward putting the investor first, even when it comes to advice under a more stringent ERISA fiduciary rule, according to the 2013 fi360-AdvisorOne Fiduciary Survey.

For the third year, fi360 and AdvisorOne have joined forces to survey attitudes of financial advisors of all types on the fiduciary standard. Highlights of the 2013 survey, which was conducted in February and March, are being announced Thursday at the 2013 fi360 Conference in Scottsdale, Ariz.

More than 84% of participants say there should be clearer differentiation between product providers and advice providers. This includes a majority in every advisor category: RIA/IAR, Registered Rep, Dually Registered as well as Insurance consultants and insurance producers, who for the first time this year participated in the survey.

In addition, 72% believe the titles “advisor,” “consultant” and “planner” imply that a fiduciary relationship exists. Here again, there is a clear majority in every advisor category.

This is a fascinating result because there is broader participation by registered reps than last year, and because of the insurance consultants and producers.

This broader mix of advisors makes it a bit more challenging to compare some results year over year. The percentage of insurance producers and insurance consultants participating in the survey is small relative to investment advisors, registered reps and dual registrants. What is more surprising and makes the data more compelling is that the insurance participants tended to agree with RIA/IARs more often than with registered reps.

Participants by Registration Type:


Registered Rep.

Dually Registered

Insurance Producer

Insurance Consultant













 1. Does Fiduciary Advice Cost Investors More?

2013 survey participants dispel the myths about advice that is in the investor’s best interest somehow costing more. Insurance companies and BDs have lobbied against the fiduciary standard for advice to investors, saying it would cost investors more and limit their access to advice. Yet, participants clearly disagree, as they have in each of the three years the survey has been conducted.

  • 79% say it does not cost investors more to work with fiduciaries than brokers.
  • 69% say a fiduciary standard of care would not price some investors out of the market.
  • 69% also say a fiduciary duty for brokers would not reduce product or service choice for investors.
  • 100% of insurance consultants and producers gave the same answers to the questions above


2. Investor Knowledge—Can They Bridge the Gap?

Once again, 97% of participants say investors do not understand the difference between brokers and investment advisors.

In addition to not understanding those material differences, it’s no surprise that individual investors would not be expected to achieve the level of specialized investment knowledge a professional advisor would acquire.

When asked about the “gap in the knowledge base between professional advisors and individual investors regarding investments and financial services,” 69% of participants say that ordinary investors cannot bridge this gap.

“Does this knowledge gap make fiduciary advice much more important to ordinary investors?” Yes, say an even higher 83% who took the survey.

3. ERISA—An Even Higher Standard

The Department of Labor (DOL) has on its 2013 agenda a plan to redefine “fiduciary” and expand the number of advisors who are considered fiduciaries under ERISA. Almost two-thirds of participants, 61% (versus 70% in 2012)—including 100% of the insurance consultants and insurance producers—agree with the Labor Department’s plan to propose such a rule.

In addition, 72% (69% in 2012) say the same fiduciary standard that applies to 401(k) plans should apply to advice on IRA accounts.

Perhaps most indicative of the dichotomy between advisors who work with investors every day and the executives who run insurance companies or BDs, 79% of advisors who took the survey in 2013 (the same percentage as 2012) say the fiduciary standard should apply to advice on distributions from 401(k) and IRA accounts.

4. Compensation

The language in Dodd-Frank does not preclude commission compensation if the fiduciary standard is extended to cover broker-dealer reps that provide advice to individual investors; however, the percentage of participants compensated by commissions is low relative to other forms of compensation. Fee-only compensation is down a tick from last year; fee-based compensation has gained share each year while fee/commission continues to trend lower.  Some of these changes in may be attributed to the increase in the proportion of registered rep and insurance producer and consultant participation this year.

Fee only

Fee-based (more fee revenue than commissions)


(more commission than fee revenue)

Commission only
















When asked about their ideal compensation model, fee only is the preferred choice overall, including almost 80% of RIAs/IARs). Forty-seven percent of registered reps, 61% of dual registrants and 67% of insurance consultants prefer the fee-based model. There was a tie in preferred model for insurance producers, with 40% favoring the fee-only model and 40% favoring the fee-commission model. None of the groups selected the Commission-only model as their ideal compensation model.

Ideal Compensation Model (Overall Responses)

Fee only



Commission only





5. In Practice

When it comes to attitudes about putting clients’ interests first, 61% of participants indicate they have a fiduciary relationship with all of their clients; 17% say, “some are fiduciary relationships and some are suitability relationships.” Eleven percent say “for some clients I have both a fiduciary relationship and a suitability relationship,” and 11% do not have any fiduciary relationships with clients.

Almost two-thirds, 64%, believe the fiduciary standard (no less stringent than in the Investment Advisers Act of 1940) would raise the credibility of financial services providers. This includes 68% of RIAs/IARs, 65% of dual registrants and notably, 100% of insurance producer and insurance consultants. However, only 37% of registered reps agree.

It may be some time before the discussion of extending the fiduciary standard of care for advice to investors in settled. If the DOL acts this year, the Securities and Exchange Commission may have to put forth its own fiduciary rule for brokers who provide advice to individual investors. But it is clear that many advisors of all types in the field understand the value of putting clients’ interests first, which of course makes it more likely that they can retain those clients over the long term. Maybe such long-term thinking would be productive in the boardroom as well. 

Watch for more on the results of the fi360-AdvisorOne Survey here on AdvisorOne.


Kate McBride, former editor in chief of Wealth Manager, is an Accredited Investment Fiduciary Analyst and founder of FiduciaryPath. She can be reached at [email protected].