Almost half of financial services firms involved in individual retirement accounts say they’ll hire extra help or redirect resources to comply with the Labor Department’s fiduciary rule.
While the industry may not immediately feel the impact of the proposed rule, Cerulli Associates reports it will spur an evolution among the products and platforms used in retirement accounts.
“Cerulli expects there will be unexpected changes to the retirement and wealth management industries, and, to a degree, this cultural evolution is what the proposed rule is hoping to effect,” says Bing Waldert, managing director at Cerulli.
When Cerulli surveyed IRA providers, 43 percent said they anticipate using additional outside resources to comply with the rule, while another 43 percent said they also expect to redirect existing resources.
Only about 14 percent said they do not plan to make any changes to comply with the rule, which is expected to be made public in the coming weeks.
Cerulli noted that the 2007 updates to ERISA-required mandatory fee disclosure on 401(k) accounts were also called a game-changer. But while firms added staff and extra resources to meet the new demands, the first wave of fee disclosure mailings was largely uneventful.
“Ultimately, the 401(k) industry matured during succeeding years as plan sponsors benchmarked costs, interest grew in low-cost passive investments, and specialized consultants increased their control,” the report said. “It may be that implementation of the DOL rule is a short-term non-event, but the effects will continue to creep into the retirement industry.”