Practice Management

Setting Confusion Aside, Firms Act on Fiduciary Reform

The latest results of the Fidelity Advisor Investment Pulse survey show advisers continue to focus on implementation of new fiduciary controls across different elements of their practices.

By John Manganaro editors@strategic-i.com | February 07, 2017
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Even with discussion and, frankly, confusion around the Department of Labor (DOL) fiduciary rule building to a fever pitch so far in 2017, advisers are not backing away from plans set in recent years to improve compliance controls and transparency.

Toward the end of last year and into early 2017, Fidelity conducted a separate poll of advisers to see how a potential postponement of the DOL rule, promised but so-far undelivered by President Donald Trump and many Republican members of Congress, would impact their plans to change business models and fee structures. According to the poll, 44% did not intend to slow down their compliance improvement plans even if the fiduciary rule were delayed or halted outright, while another 19% “were proceeding only slightly slower with their plans.”

“Advisers continued to focus on implementation and have firmly shifted their focus from the ‘what’ to the ‘how,’” explains Scott Couto, president, Fidelity Institutional Asset Management. “While they have invested time, energy and resources to understanding the rule and its implications, they have now directed their attention to what it means for their practices, including how to implement the necessary changes, regardless of any potential regulatory developments.”

According to Fidelity researchers, many advisers remain focused on strategic and tactical changes related to how they run their practices and work with their clients, “including identifying potential new clients as they move toward more fee-based business, as well as balancing face-time with clients and the time needed to complete compliance requirements.”

Fidelity encourages advisers to continue these efforts for the good of the end investor—and urges advisers for their own sake to install a highly disciplined process for crafting and maintaining business models in this complicated environment.

“A deliberate, defensible and documented process on how investment options are evaluated may increase client confidence in recommendations,” Fidelity explains. “It is important that advisers look across the different product features and benefits and a structured process for documenting client interactions, including any recommendations or guidance the adviser provides, can help frame discussions around fees and services.”

Optimizing productivity is also crucial, Fidelity’s results show: “By being efficient at investment management, advisers can turn their attention toward areas where they can deliver more value,” researchers note. “For example, they can gain scale and efficiency in managing investments by considering model portfolios and reviewing their manager selection process. This will free up time to provide goals-based planning.”

NEXT: Fiduciary uncertainty spells opportunity