Two direct implications of the Department of Labor’s fiduciary rule – fees and compliance – are advisors’ main concerns going into 2017, according to a survey from SEI Advisor Network.
The survey of 275 financial advisors, conducted at SEI Strategic Advisor Council Conferences held this fall, found that the majority is equally concerned about fee compression (nearly 24%) and increased legal and compliance issues (nearly 24%). Advisors are equally concerned about growing revenues (nearly 24%).
By April 10, 2017, advisory firms must be ready to comply with the DOL’s definition of fiduciary on retirement accounts and must be fully adjusted to the change from non-fiduciary to fiduciary status.
The new fiduciary standard prohibits advisors from making recommendations that will cause compensation for their services to be more than reasonable, which will likely cause fee compression in some parts of the industry.
“These survey results demonstrate that the rule is impacting advisors’ considerations in several aspects of their business when looking at 2017, which is one reason we are seeing advisors re-evaluate their infrastructure, increase attention to client-facing activities and focus on the outsourcing of non-client facing activities,” said Wayne Withrow, executive vice president of SEI and head of the SEI Advisor Network, in a statement
More than half (55%) of advisors plan to increase technology investment spending in 2017, according to the survey. The survey also finds that outsourcing non-client facing activities is another key focus for advisors next year, with 30% of respondents saying that legal and compliance is an additional area that they are considering to outsource.