Practice Management

Advisers Looking to Technical Solutions Ahead of DOL Rule

A new survey finds that as implementation of the DOL’s fiduciary rule approaches, more than half of advisers expect to increase investment in client service and compliance technology.

By Javier Simon editors@assetinternational.com | December 05, 2016

Moving into 2017, financial advisers are keeping a close eye on the Department of Labor’s Conflict of Interest Rule, which goes into effect in April. 

A new survey by the SEI Advisor Network reveals that compliance and compressed fees are the top concerns for advisers as implementation of the rule draws closer, with 24% of advisers citing each as a major priority. The next biggest concern is increasing revenue.  

In order to enhance compliance practices and otherwise ease the transition towards more fee-based business, advisers are increasingly turning to technology. The survey found 55% of advisers expect to boost investments in technology throughout 2017.

Recently, several firms have been launching different software tools and programs to help advisers comply with the fiduciary rule. Such services have been led by companies like RIXtrema, AssetMark, Advicent, as well as SEI and Redtail, among others.

Thirty-percent of advisers said they are also considering outsourcing the legal and compliance aspects of their business. And despite speculation that a Donald Trump presidency will halt the DOL rule in its tracks, many advisers are still moving forward with improving compliance capabilities—a move encouraged by SEI.

“We believe advisers need to continue to prepare for the DOL rule despite current speculation that it will not come to fruition because of the incoming administration,” says Wayne Withrow, executive vice president of SEI and head of the SEI Advisor Network. “These survey results demonstrate that the rule is impacting advisers’ considerations in several aspects of their business when looking at 2017, which is one reason we are seeing advisers re-evaluate their infrastructure, increase attention to client-facing activities and focus on the outsourcing of non-client facing activities.”

When asked what keeps them up at night, 24% of advisers said that regulations like the DOL fiduciary rule are their greatest concern. Furthermore, the survey found that only 11% of advisers feel ready for the implementation of the rule, while 41% feel that they are almost ready.

“Even with the level of unpreparedness felt by financial advisers, 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,” says Withrow.

The financial adviser survey was conducted in October and November 2016 with 275 advisers working with SEI, and attending SEI’s regional Strategic Advisor Conferences.