What Is the DOL’s Proposed Fiduciary Rule? Investors Don’t Know but Would Like to Find Out

by on Apr 05, 2016

dept_labor_seal.pngOn February 23, 2015, President Barack Obama called on the Department of Labor to update its rules and requirements to ensure financial advisors put their clients’ best interests above their own. “It’s a very simple principle,” Obama said, “You want to give financial advice, you’ve got to put your client’s interests first.”

The DOL released the initial version of the proposed rule on April 14, 2015. Nearly one year later, with the final version of the rule forthcoming this Wednesday April 6, according to an article in the Wall Street Journal, individuals nationwide are still grappling with one fundamental question: what exactly is fiduciary duty?

Google searches for “fiduciary duty” and “fiduciary rule” are spiking, demonstrating investors’ desire for information. An Investment News article highlights this trend and includes an interactive graph that displays the search volume index (SVI) for both “fiduciary duty” and “fiduciary rule” on a monthly basis beginning in 2004. SVI calculates the number of searches for a key word or phrase against the total searches on Google. The graph illustrates a skyrocketing increase from a May 2015 SVI for fiduciary duty and fiduciary rule of 71 and 19, respectively, to a SVI of 90 and 100 in March 2016.

fiduciary_search_over_time_graph.pngFiduciary Search over Time Graph

Leading life insurance and annuity providers, though, have not kept up with the inquisitive demand: Across the 24 different firms in the Annuity Monitor and Life Insurance Monitor coverage groups, there has been exactly one mention of the DOL’s proposed rule on these firms’ public sites, a solitary press release from Voya. In the advisor site realm, a few firms in our coverage group such as Principal, MassMutual and Nationwide feature DOL rule-related educational information on their sites for financial professionals.

MassMutual stands out for its extensive advisor site coverage of the proposed rule, which the firm has been tracking since its inception. MassMutual launched an entire advisor site page dedicated to the DOL rule and posts a DOL rule-related blog article for advisors almost weekly. The new DOL page includes a What’s at Stake section that summarizes the firm’s take on the proposed rule’s potential impact. The page also provides the latest news, resources, FAQs and DOL press releases from the firm. Advisors can further access grassroots advocacy efforts sponsored by MassMutual’s Government Relations Department on the page and are asked to direct their DOL rule-related questions to a dedicated email hotline. These useful site features, however, are only accessible to MassMutual advisors and don’t directly benefit an average client or prospect.

advisor_site_blog_post.pngAdvisor Site Blog Post Announcing Launch of DOL Page (Truncated)

Firms may be waiting for the final version of the rule to be released before creating comprehensive educational content for advisors and clients. This is understandable given the great deal of uncertainty surrounding the proposed rule; however, there is no reason for the complete dearth of any materials that could help educate prospects and clients in advance of the rule’s release. Investors should not have to turn to less reputable sources found through a Google search to find information on such a significant and trendy industry topic.

This gap in educational content should be addressed by every firm in the industry with publicly accessible informational articles and videos that outline the rule’s broad intentions, explain what the DOL has released so far, provide updates on congressional lobbying efforts and examine potential impacts of rule after it goes into effect. Annuity Monitor and Life Insurance Monitor will continue to look out for publicly accessible fiduciary duty and DOL proposed rule content as the release date for the proposed rule draws near.