A sizable majority of 401(k) plan participants want their financial advisers to be legally required to act in their best interest, according to results of a survey by Financial Engines Inc., an independent investment advice firm.

Almost nine out of 10 retirement investors said it's very important (69 percent) or somewhat important (18 percent) to work with a financial adviser who is legally required to take on fiduciary responsibility, according to the survey report, “The Human Touch: The Role of Financial Advisors in a Changing Advice Landscape,” released Oct. 13.

Financial Engines said in its report on the survey results that the Department of Labor's proposed fiduciary rule (RIN 1210-AB32), with its focus on requiring advisers to accept a fiduciary standard of care when handling clients' investments, “dovetails” with the survey's findings.  

The Sunnyvale, Calif., company offers retirement plan investment management and advice to more than 600 companies nationwide, including 143 of the Fortune 500, and states that it's a fiduciary in this role. Its fees are based on a percentage of a client's account assets, and not commissions.

Among the more prominent companies on Financial Engine's list of clients are Alcoa Inc., Comcast-NBCUniversal, Delta Air Lines Inc., Ford Motor Co., IBM Corp., J.C. Penney Co., Kellogg Co., Kraft Foods Inc., Microsoft Corp. and Xerox Corp.

“The rule is not only workable, but we're proof that it's workable,” Mike Jurs, director of public relations and social media for Financial Engines, told Bloomberg BNA. “And we've been doing it now for almost 20 years. And we would also say it's the right thing to do for our 401(k) participants, who need that extra level of protection.” 

The survey was conducted in August with more than 1,000 employees who participate in their employers’ defined contribution plan.

“While we do not yet know the outcome of the proposed new regulation as of the publication date of this report, we know that many companies like ours will continue to embrace our fiduciary role and provide investment advice in the best interest of their clients,” the survey report said. “We hope that a new fiduciary rule will encourage more financial advisors to find ways to also serve as fiduciaries.”

In its July 21 comment letter to the DOL, the company embraced the proposal, but not without making a few recommendations.

It asked the department to clarify when an adviser's conversation with a client about fiduciary advisory services can be construed as a recommendation, which would trigger fiduciary responsibilities. It also asked for changes to clarify that advisers that intend to offer fiduciary services wouldn't prematurely become fiduciaries simply because they used phrases that attempted to convey the meaning of fiduciary duty and responsibility.

Access to Financial Advisers 

A major part of the survey explored participants' interest in access to financial advisers and online financial advice.

While 60 percent of respondents expressed interest in an online advisory service alone, 68 percent were interested in such a service that includes access to a financial adviser.

“When it comes to important financial decisions, there's a large emotional component,” Jurs said. “And we found in our business people really do want to talk with an expert.”

Financial Engines was founded in 1996 as the first robo-advice company, but also offers an advisory center, he said. The company doesn't require a minimum balance on 401(k) accounts or individual retirement accounts, he said.

Thomas E. Perez, secretary of the Department of Labor, has touted robo-advisers such as Financial Engines, Betterment and Rebalance IRA as examples of advisory companies that offer low-cost services to smaller investors when he has promoted the DOL's proposed conflict-of-interest rule.

Industry opponents, and lawmakers such as Rep. Peter Roskam (R-Ill.) and Rep. Sean P. Duffy (R-Wis.), have claimed that the rule would force advisers to drop small investors, who would then have to resort to robo-advisers, which they claim won't be able to meet customers' needs.

“We consider that argument to be baseless,” Jurs said. “What we would say is that the solution is not either/or, not robo-advisers or high-touch human advisers. It's really that combination.”

Excerpted from a story that ran in Pension & Benefits Daily (10/14/2015).

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