Will charging fees put financial advice out of reach for some consumers?

How will the upcoming U.S. Department of Labor fiduciary rule impact clients and advisors? Simon John Gibson, DipPFS, of Newmarket, England, has a concern about the switch to fee-based business from what he’s seen in the UK:

“The savings gap is something we hear a lot about in the UK. The gap is widening, and the government and the regulators are creating that gap,” he said. “They’re making it more difficult for the people who are not in a position to pay for and get great advice, and they’re not saving enough. I’m certainly not against some of the regulations, but I don’t think they’re helping the savings gap with some of the decisions that are being made.”

Juli McNeely, CFP, CLU, of Spencer, Wisconsin, agrees: “I think my biggest fear is that this will result in this huge gap of individuals who just can’t get advice, and I think what we need the most is some financial literacy training, education in some way,” she said. “There was a time when that was taught in a high school or college, and it’s just not being done anymore. So I’m finding individuals that I would have expected would have a basic understanding of really how to manage their own finances, and they really don’t have that understanding. So if we’re unable to get compensated in any way because maybe they don’t have a significant sum of money to invest, how are we supposed to justify the time it takes to spend and bring them up to speed on their personal finances? I think this gap is going to widen in the U.S.”

Listen to more insights about the impact of the DOL fiduciary rule in the first installment of the three-episode MDRT podcast series about the DOL regulation, and stay tuned for episode 2, discussing how advisors can adapt and prepare for the rule.

Written by Matt Pais, MDRT Content Specialist