Americans Expect Fiduciary Standards in Retirement Advice
A recent survey underscores that an overwhelming majority of Americans (97%) expect financial professionals providing one-time retirement investment advice, such as rollovers from a 401(k) to an IRA or annuity, to act in their best interests. This strong public sentiment supports the U.S. Department of Labor’s (DOL) initiative to redefine the role of an investment advice fiduciary under ERISA to include more types of retirement advice. The proposed rule aims to align the legal framework with what clients already assume—that their financial advisors are acting as fiduciaries, especially in decisions involving retirement rollovers.
Aligning Financial Advisors’ Roles with Client Expectations
The findings reveal a gap between public expectations and the current regulatory framework. While 92% of Americans believe that advisors recommending retirement fund rollovers are obligated to prioritize clients’ interests, only a minority are aware of the specific fiduciary duties involved. Furthermore, 64% of survey respondents expect such financial professionals to operate as fiduciaries, yet confusion remains among the rest, with 31% unsure of the fiduciary status and only 5% not expecting fiduciary conduct at all. This highlights a critical need for clearer regulations that ensure advisors are legally bound to act in the best interests of their clients.
Impact of Regulatory Changes on Financial Planning
Despite concerns, broadening fiduciary standards has not constricted the flexibility of financial planning services or access for moderate-income investors, according to a CFP Board survey. After regulatory changes in 2020, 90% of Certified Financial Planners (CFPs) chose not to increase the minimum investable assets required from clients, indicating that higher standards do not necessarily mean restricted services. Moreover, 52% of CFPs advise clients earning less than $75,000, demonstrating that enhanced fiduciary responsibilities can coexist with widespread access to quality financial advice, benefiting a broad demographic spectrum.