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In Practice September 10, 2013
Aberdeen Finds RIA Fiduciaries Win Business
Most RIAs agree that the
requirement to act as fiduciaries helps them win business away from wirehouse
brokers.
Reported by Sara Kelly
One way advisers can turn prospects into clients is by educating them on the differences between the fiduciary and suitability standards, according to Aberdeen Asset Management’s survey of registered investment advisers (RIAs) and other industry experts. The majority of respondents (77%) believe that less than 10% of their prospects are aware of those distinctions, and three-fourths (75%) of investment advisers believe that providing this information to prospective clients increases their chances of being hired, over a wirehouse broker.
When advising on individual retirement accounts (IRAs), RIAs have upheld the fiduciary standard—to act in the best interests of their clients and avoid material conflicts of interest—for nearly 75 years. The suitability standard calls only for choices to be made according to what is suitable for an investor based on his circumstances. Stockbrokers and insurance agents are currently required only to follow the suitability standard, but impending proposals from the Department of Labor (DOL) may lead to stricter regulations.
“Should it be legislated that all securities professionals be held to the fiduciary standard when managing IRA [individual retirement account] assets, the playing field will be made level, creating new opportunities and challenges for all those offering investment products and advice,” said Mickey Janvier, head of wealth management at Aberdeen.
The data from the Aberdeen Asset Management RIA Survey, conducted between August 18 and 20 at the 2013 LPL focus13 Conference in San Diego, is based on answers from 335 respondents.