For as much press as the recent financial reform bill has received, the majority of financial advisors apparently are unaware of its importance on their business and clients.
According to an SEI Advisor Network survey, nearly 75% of advisors are either “somewhat familiar” or “not familiar” with the implications of financial reform. And only 6% said they are “very familiar” with these changes in the industry. Moreover, more than half (56%) of the advisors have not discussed recent reforms with their clients, according to a press release from SEI.
“Currently, advisors are spending more time talking to clients about the volatile market and not focusing on other parts of the business [which] has caused advisory to lose a significant amount of money,” said Wayne Withrow, SEI executive vice president and leader of the SEI Advisor Network in a phone interview. But, he added, “Given the volume and pace of information concerning regulatory reform, it is not surprising that financial advisors are not completely up to speed on the reform in its various stages.”
Roughly, 43 % claim that they are “undecided” when it comes to how the reform will affect their daily business operation like the sales process and client retention strategies. And 40% are unaware of whether the changes will cause a decrease in clients demand for their services.
“The biggest impact will depend upon the results of the SEC study on fiduciary standard for all financial advisors,” said David Strege senior wealth coach of Syverson Strege & Co., in Iowa, in an email response to On Wall Street. “If the SEC [decided] that all financial advisors are fiduciaries in the role of giving advice and that they must work for the best interest of the client, [that] will cause significant changes to be made in many practices.”
On Wednesday, President Obama signed the financial reform bill into law. Under this new law, a council of regulators will be assigned to scrutinize markets that have slid under the financial radar. It also gives the government the authority to regulate companies that are threatening the economy.
Withrow says that the uncertainty in the market coupled with the advisors’ lack of knowledge on reforms can only add to the existing problems the industry is experiencing. “I’ve found that being conversant in this complex topic has been a differentiator in communicating with clients and prospects,” Strege said.