Many Americans may not know the ins and outs of who is a fiduciary, but new research by Financial Engines finds that a big majority — 93% — think advisors should be legally required to put their clients’ interests first, especially when it comes to retirement savings.
The research was based on a survey conducted in late February of 510 adult men and 508 adult women.
The poll results come as the Department of Labor’s final “conflict-of-interest” rule, which will have major ramifications for 89 million participants in defined-contribution plans and providers of retirement advice, is expected to be released soon.
Sixty-six percent of survey participants said they did not know the difference between an advisor who was a fiduciary and one who was not, and 16% were unsure.
Even among those who used financial counsel, 43% did not know or were unsure whether their advisor was a fiduciary.
Nearly half thought that all financial advisors were already required to put clients’ interests ahead of their own.
Financial Engines, an independent investment advisor and fiduciary for retirement plans that supports the DOL’s fiduciary rule, said industry jargon may sow confusion about what it means for an advisor to be a fiduciary. Only 18% of respondents purported to understand the meaning.
Researchers asked respondents whether it was good or bad for them that certain conflicts of interest were currently allowed among financial advisors providing retirement advice.
Fifty-five percent said it was bad for them, and 35% were unsure. More men than women and more baby boomers than millennials said it was bad for them.
As to whether advisors who provide retirement advice should be legally required to act as fiduciaries, 77% said they would support such a requirement, and 93% said it was important that all financial advisors be legally required to put their clients’ interest first.
At present, three-quarters of American adults do not work with an advisor, according to Financial Engines. However, 63% of survey participants said they would be more likely to do so if they knew the advisor was a fiduciary.
“Our research shows that even if people may not fully understand the intricacies of who is a fiduciary and who is not, they have a clear preference for advisors who are legally required to put their clients’ best interests first,” Christopher Jones, Financial Engines’ chief investment officer, said in a statement.
— Check out DOL Chief Perez Prepared to Explain Final Fiduciary Rule on ThinkAdvisor.