CoreData’s Digital Intimacy Report finds people are more likely to take action when allowed to experience the brand on their terms and not have messages pushed onto them. A quarter’s response to online marketing depends on how much they trust the brand in question.

Stocks and shares Isa ownership among women is low. If levels of stocks and shares (S&S) Isas are brought in line with those of males, the industry could see an estimated pot of £8.83bn flowing into these products.

24.5% of people were primarily motivated to start thinking about estate planning by starting a family, 23.1% claimed they had simply reached a certain age, and 14.3% were encouraged to think about estate planning by financial advisers.

28.8% of women and 14.3% of men claim their most trusted adviser on estate planning issues is a family friend.

25.0% of 45-54 year olds and 33.3% of 65-74 year olds say they openly discuss wealth in their families, as well as 61.5% of the 35-44 age group.

Investors believe UK and European shares will dominate the first half of 2014, with sentiment shifting heavily in their favour at the expense of both emerging and frontier markets.



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The Fiduciary Rule

November 2016

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On April 6, 2016, the Department of Labor introduced a long-awaited ruling which requires advisors to put the interests of their clients above their own, adhering to a fiduciary standard of advice.

The Best Interest Contract Exemption (BICE) allows advisors to receive commission and other sales fees while still complying with the fiduciary standard. All of which means commission stays, but how easy this will be for advisors to implement is uncertain.

The rigidness of the BICE guidelines has eased significantly since conception. Originally, the exemption limited the scope of permissible assets to recommend (non-traded REITs were not permitted for example) and required extensive disclosure on fees and costs. The implementation period of the rule has also changed, with the full compliance deadline extended one year until January 1, 2018.

These developments should ease some of the concerns over the regulatory costs of the rule but will not fully eliminate them. The financial industry has warned the cost of the rule will make advice more expensive and that the financial burden will fall upon consumers — as was the case when similar regulation was introduced in other countries.

Opponents of the rule argue smaller clients will be faced with unaffordable fees, thereby limiting the access that middle-class investors have to advice. Previous CoreData analysis revealed that about seven in ten advisors in the UK said the Retail Distribution Review (RDR) had made it more challenging to work with low balance clients. To combat this, a third said they would consider adding an execution-only service for low balance clients.

Indeed, similar regulation in the UK and South Africa has steered middle-class investors away from advice. Previous CoreData studies show about one in five advisors in the UK and one in four in South Africa reported a decrease in the number of clients they advise. Regulation has also impacted investment products. About four in ten advisors in the UK and South Africa said regulation had influenced the investment products they advise on.

Advisory firms in the US are expected to hire new staff to help implement the rule. This would mirror the example of advisors in the UK and South Africa who reported taking on new staff (and the associated costs) to help comply with regulation. About one in five in the UK and South Africa cited regulation as reason for hiring new people.

Under the new rules, the BICE heightens brokers’ liability risk. This impacts the cost-benefit analysis of the commission model. If advisors want to continue earning commission, they must sign a legally binding contract with clients detailing their fiduciary responsibilities, revealing any potential conflicts of interest and stating firm policies to mitigate conflicts of interest. While the contract aims to hold advisors accountable, the cost of implementation is high.

If advisors are to demonstrate the advice they give is in the best interest of clients, they will have to develop a solid understanding of client needs in order to justify their recommendations. Many think this will result in advisors spending more time meeting clients. This certainly holds true for the UK, where four in ten said they met with clients more following regulatory change.

Even though commission-based advice is still allowed under the new US rule, many firms with revenues heavily derived from commission will look at redressing the balance between upfront fees and commission. Although the DOL rule has evolved into a more diluted version of the original proposal, advisors should nevertheless reconsider their compensation policies for the long-term in light of increased regulation and scrutiny of the industry.

How President-elect Donald Trump will approach the fiduciary rule remains uncertain. Before the election, the rule was set to progress forward.