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,
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
“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.