The vast majority of Americans want retirement advice to be in their best interest and think that is what they are getting, according to a new survey by CFP Board.
Conducted by the the Center for Economic and Social Research at the University of Southern California on behalf of CFP Board, the survey covered 736 Americans who had worked (or are working) with a financial professional in February of this year. The survey found that nearly 97 percent of Americans agree that advisors who provide one-time recommendations about retirement investments should be required to act in their clients’ best interest. According to the survey, 92 percent believe that is the case.
As it stands, that is an erroneous assumption.
According to the Employee Retirement Income Security Act, the federal law governing retirement plans, anyone who exercises discretion over the assets of an investment plan automatically owes a fiduciary duty to their clients. However, one-time recommendations, such as those given by advisors to clients on rollovers of retirement funds into an IRA or annuity, are not required to meet a fiduciary standard currently set under ERISA and are a recognized blind spot by the government.
In November 2023, the Department of Labor proposed a new Retirement Security Rule that would expand the definition of fiduciary advice and aims to address that fiduciary gap.
About 86 percent of survey respondents said they had received advice from a financial professional to move funds from a workplace retirement program. The majority believed that advice was in their best interest. According to CFP Board, the organization responsible for wealth management’s most popular certification, only 5 percent of respondents said they did not expect a financial professional to meet a fiduciary standard when giving advice about rolling over a 401(k) or 403(b).
“Workers and retirees seek a financially secure and dignified retirement and deserve to have financial professionals delivering retirement investment advice in their best interests,” CFP Board CEO Kevin Keller said in a statement. “The Department of Labor’s proposed Retirement Security Rule helps assure clients that they can trust their advisor to help them achieve their investment and retirement goals confidently and ethically. This new rule would close existing regulatory gaps from antiquated regulations that were created in 1975.”
According to CFP Board’s survey, almost all Americans believe the fiduciary standard should be a requirement for financial professionals providing one-time retirement investment advice.
Their wish might soon come true.
The comment period for the DOL rule proposal ended on January 2, and on March 8, the DOL sent the final version of its rule proposal to the Office of Information and Regulatory Affairs, an organization within the Office of Management and Budget known as OIRA, for review. OIRA will most likely publish the final rule after its review, which can take up to 90 days.
