In February 2015, the Department of Labor announced its intention to expand its rules and regulations governing all financial advisors who work with retirement plans or provide retirement planning services. The proposed rules would elevate these advisors to the level of a fiduciary, binding them to the highest legal duty to ethically act in their clients’ best interests. This was in response to accusations the retirement industry had been pushing expensive products, costing clients millions of dollars in commissions. Verbatim spoke with hundreds of advisors to identify their level of anxiety, potential changes to their business model, and the expected impact to their financial health. While increased costs were expected, the actual impacts to different segments on the industry were more difficult to discern. Registered Investment Advisors (RIAs) and fee-only advisors would see their compliance costs increase, while the number of products they were allowed to offer would shrink. As a result, many RIAs were planning stop handling smaller accounts as it would be cost prohibitive. Our clients were able to incorporate our findings into their forecasting models for how a company’s earnings may be affected by these rule changes.

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Data sourced from Verbatim custom reports from 2014-2015