Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Regulation and Compliance > Federal Regulation > DOL

Fee Compression, Compliance Are Top Concerns for Advisors: SEI Survey

Your article was successfully shared with the contacts you provided.

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.

Withrow joined others in urging advisors to continue their compliance efforts despite threats to the DOL rule.

“We believe advisors need to continue to prepare for the DOL rule despite current speculation that it will not come to fruition because of the incoming administration,” Withrow said in a statement.

The head of the Senate Homeland Security and Governmental Affairs Committee – Sen. Ron Johnson, R.-Wis. – recently told Labor Secretary Thomas Perez to halt implementing the DOL fiduciary rule because it will likely be “undone” by the incoming Trump administration.

The survey asked advisors if they are ready for the implementation of the DOL Fiduciary Rule in 2017. Of the respondents, only 11% said yes. However, 41% said they were “almost” ready. Nearly half, though, said they were not ready (27%) or they were “not sure” (20%).

“Even with the level of unpreparedness felt by financial advisors, the survey results imply that they are considering the necessary steps to plan, execute and comply by converting to a fee-based model to get in front of the rule with clients top of mind,” Withrow said in a statement.

— Related on ThinkAdvisor:


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.