DOL Fiduciary Has Many Advisors Mulling Career Change: Fidelity Survey

As more details emerge on what is expected of advisors and their partners from the Department of Labor’s fiduciary redefinition under ERISA, more advisors are finding their peace with the rule. However, there is also a sizable minority who are rethinking their career choice.

Those are two somewhat contradictory findings from Fidelity Clearing and Custody Solutions’ latest survey of 459 advisors across the business-model spectrum.

In the blind online poll, conducted August 18-26, 29% of advisors surveyed said they expect the DOL rule to have a positive impact, compared to only 12% in the previous survey that had a similar sampling of 489 advisors conducted in January, before the final DOL rule was released.

However, 10% of the advisors in the most recent survey said they are planning to leave or retire from the field earlier than they expected because of the rule, while another 18% said they are “reconsidering their careers as advisors.” Those numbers are even more startling considering the average age of survey respondents was 46.

Of those surveyed, 54% said they had taken some action in response to the rule, significantly up from the 20% who said the same in January. Tom Corra, COO of Fidelity Clearing & Custody, said the increase was not surprising since “we now have some level of certainty” about the DOL rule, though “the entire industry is still waiting for clarification” from the Department of Labor (in a session at the FPA’s national conference earlier this month, Tim Hauser of DOL said the department will issue guidance “soon” on a “rolling basis” starting this fall in the form of frequently asked questions (FAQs). He also warned broker-dealers to get their questions about the rule into the department now).

The sampling in Fidelity’s August survey included 30% independent broker-dealer reps, 21% RIAs, 19% regional BD reps, 15% from wirehouse firms, 11% insurance BD reps and 3% from banks.

As for the high number of advisors surveyed considering retirement or career change, Corra speculated the finding “may be connected to advisors who haven’t had the time to consider how they’re going to navigate this process,” which wouldn’t be surprising “given the more than half who haven’t started” to figure out that process.

Corra reported that, in general, “wirehouses show higher levels of preparedness” for complying with the DOL rule; the first deadline for doing so is April 2017. That’s not surprising, Corra said, since the wires and larger independent broker-dealers “have a higher degree of resources and more specialization” than smaller firms, and because “any regulation will be more challenging for firms with fewer resources.”

However, Corra said Fidelity is “having conversations” with even larger broker-dealers on how they “can use our resources” to comply. One other likely development: Corra echoed his Fidelity colleague David Canter, who is among those saying the DOL rule is “likely to drive more in the way of mergers and acquisitions,” especially among smaller firms.

In the August survey, 21% of advisors surveyed agreed with the statement that their firm “is more actively pursuing acquisitions.”