Delay or no delay, a new regime governing how US wealth advisors charge clients is changing the face of the industry, a report says.

The Department of Labor may have delayed the date from when its Fiduciary Rule to June 9 this year, but the largest shakeup to financial advice in the US for decades is still changing the face of the industry, a report says.

Nearly two-thirds (64 per cent) of broker-dealer advisors plan to shift more of their business toward fee-based advisory in an attempt to be better positioned to comply with the DOL’s Fiduciary Rule’s approach to conflicts of interest if it is implemented. As advisors become increasingly comfortable operating in a fee-based environment and embrace fiduciary duty, they may be more likely to consider the channel of registered investment advisor status, Cerulli Associates, an analytics firm, said.

Close to half (47 per cent) of all advisors believe that the RIA business model will become more appealing when the DOL’s new regime takes shape.

Last year, the DOL brought out a much-anticipated rule that imposes standards on how brokers charge clients to make sure they put customers’ interests first. The rule is designed, its supporters say, to make financial services in the US more professional and less subject to product “push” from fund providers and other entities. The rule is expected to affect about $3 trillion of client assets in the US (source: Wall Street Journal, Morningstar).  Morgan Stanley recently announced that wealth management clients can if they wish continue to pay commissions to advisors, putting it on a different track to rival Bank of America Merrill Lynch. Morgan Stanley said clients can also choose the option of paying a fee based on the value of account assets. The rule was due to take full effect from the start of April; under the new Trump administration, however, the rollout of the rule has been delayed to June.

Cerulli’s report, among other findings, showed that 64 per cent of broker-dealer advisors plan to shift more of their business toward fee-based advisory. 

Nearly equal numbers of advisors report frequently or always choosing strategic beta products for cost savings versus active management (48 per cent) as report using these products to provide specific factor exposure (47 per cent). Cost is a key investment consideration, particularly when focusing on long-term outcomes, but advisors and investors must incorporate other elements into their thinking.