The DOL’s definition of who’s a fiduciary and who’s not a fiduciary seems to be a never-ending headache. The Sword of Damocles hangs over the heads of so many Broker-Dealers and RIAs depending on which way the wind is blowing, with most wishing a gust would blow it right offshore. Who in their right mind wants to be subject to 408(b)(2) disclosure rules?
[Read Fiduciary responsibility: Hot potato or hot topic?]
A recent survey of FreeERISA financial advisors shows that 73 percent of them listed “regulation” as one of their top three greatest business challenges. Second and third place were increased competition (61 percent) and fee compression (58 percent). So with that thought, it’s no wonder they want to avoid being labeled as a fiduciary: something that comes with a lot of excess regulatory baggage.
But what about those advisors who aren’t worrying because they already are fiduciaries?
- They tend to have more experience: 64 percent have been working as financial advisors for more than ten years, versus 46 percent for non-fiduciaries.
- More fiduciaries are self-employed (43 percent versus 30 percent).
- They have larger books of business (54 percent manage more than ten 401(k)s versus 33 percent for non-fiduciaries).
- Most work with smaller firms (if you’re into that kind of thing).
But the biggest reason fiduciaries have it good?
- 35 percent earn more than $150k in annual income, versus only 23 percent for their non-fiduciary peers.
I’m not saying that getting involved with a plan as a fiduciary is going to up your take-home pay, nor am I saying that the DOL deciding that so-and-so happens to be a fiduciary is going to do anything except give you a massive headache: all I’m saying is that with great responsibility comes other great things. From time to time.
