Survey: Retirement Savers Concerned About Financial Harm Under Fiduciary-Only Government Regulation
A majority of moderate-income savers who are in or near retirement are concerned that a fiduciary-only regulation would keep them from the professional financial guidance they want and need, especially during difficult economic times. This finding is from a new survey by Greenwald Research for the American Council of Life Insurers (ACLI).
A fiduciary-only regulation would eliminate the help moderate-income retirement savers receive from financial professionals who receive one-time commissions. Only those with substantial savings and higher incomes who can afford to pay ongoing fees for fiduciary services would have access to help from financial professionals. In 2018, a federal appeals court struck down a fiduciary-only regulation that was adopted by the U.S. Department of Labor in 2016. An effort to resurrect the regulation is now underway.
The Greenwald survey examined views on access to financial professionals for those ages 55 to 70, with life savings in the lower half of financial wealth when compared to all Americans of their age. They are either working with a financial professional receiving compensation based on commissions or are planning to start working with a financial professional within a year.
"These savers are not very confident that they can do key tasks to ensure financial security throughout retirement without the help of a financial professional," said Mathew Greenwald, founder & managing director, strategic initiatives at Greenwald Research. "Those who receive financial guidance overwhelmingly trust and depend on the professionals they work with, feel they are worth the cost, and would be adversely impacted if they could not work with their financial professional."
Moderate-income savers – who tend to be more financially vulnerable – overwhelmingly value access to financial professionals who receive compensation by commission and feel they would be negatively affected without the guidance. Fully 85% believe they have at least a somewhat great need for financial guidance from a professional. And 81% feel the guidance they receive helps them feel reassured during difficult economic times.
Of those without a financial professional, almost all believe it would be important to work with one to feel reassured through difficult economic times (97%) and during times of high inflation (97%).
A strong majority of survey respondents (71%) viewed the guaranteed lifetime income from annuities as valuable and a majority also expressed strong interest in these products. Since annuities are sold on a commission basis, a fiduciary-only regulation would make this product unavailable to retirees who could benefit from them.
"The survey found that moderate-income retirement savers strongly oppose government regulations that would discourage or prohibit financial professionals from being compensated by commission," Greenwald said. "They feel that compensation by commission is sometimes preferable to ongoing fees."
The survey results can be found here.
The American Council of Life Insurers (ACLI) is the leading trade association driving public policy and advocacy on behalf of the life insurance industry. 90 million American families rely on the life insurance industry for financial protection and retirement security. ACLI's member companies are dedicated to protecting consumers' financial wellbeing through life insurance, annuities, retirement plans, long-term care insurance, disability income insurance, reinsurance, and dental, vision and other supplemental benefits. ACLI's 280 member companies represent 94 percent of industry assets in the United States.