Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Tuesday, December 8, 2009

Adviser Group Releases Survey of Financial Professionals' Views on Fiduciary Standard

The SEI Advisor Network and The Committee for the Fiduciary Standard recently conducted a survey of financial advisers and brokers to determine the level of support and understanding of the fiduciary standard.  The survey was completed by 890 RIAs, IARs and registered broker-dealers, who self-identified their compensation structures as follows:  commission (132), commission-fee (510) and fee-based and fee-only (242).  The findings include:

A majority of brokers (53%) believe that "all financial professionals who give investment and financial advice should be required to meet the fiduciary standard;"  twenty-seven percent disagree with the statement.  Among those who identified themselves as fee-based and fee-only advisers, 86% agreed with the statement.

Eighty percent of brokers stated that they understood the fiduciary standard either "fairly well" or "very well."  Nearly all (98%) of advisers stated they understand the standard "fairly well" or "very well."

Respondents were asked if they believed that they should be allowed to meet a fiduciary standard in providing advice and then revert to a suitability standard when recommending products.  Ninety-three percent of fee-based and fee-only advisers disagreed with that statement, as did fifty-five percent of commission-fee brokers.  In contrast, thirty-seven percent of commission-only brokers disagreed with that statement.

As to compensation, fifteen percent of advisers said that they believe investors do not care how they are compensated, in contrast to fifty-six percent of commission-fee brokers and sixty-three percent of commission-only brokers.

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