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Fiduciary Rule Aftershock: Communication Considerations for Financial Services Firms

How financial services firms can communicate fiduciary rule details to clients

4 min read


Gregg Dinino

What is widely known in the investment industry as the “fiduciary rule” has been met with much hand-wringing over the past several months by large financial institutions, and for good reason. New legislation around this rule expands the type of investment advice covered by fiduciary protections; trillions of dollars are at stake— $14 trillion to be exact.

Heading into 2016, Americans have more than $14 trillion saved in retirement accounts—that’s more than the combined gross domestic products of Germany and Japan combined! With just over $7 trillion in IRA retirement accounts, just under $7 trillion in defined contribution plans, and $4.7 trillion of this in 401(k) plans; broker dealers, financial advisors, and asset management firms are assessing what the changes might mean for their businesses. With so much money at stake, what are the most important communication considerations for financial services brands to share with current and future customers?

Clearly define what being a fiduciary means

At a baseline, firms should be striving to clearly define what exactly the role of a fiduciary is and what the benefits are to their customers. Their definitions should include trust and transparency, while also stressing that always act in their investors’ best interests, and they maintain zero conflicts of interest. Many customers aren’t aware that this wasn’t the standard in the investment industry all along, so education is important.

For some firms who manage assets and offer planning services for a flat fee, the communication should be less complex because many have already been following these investor protections for years, and this law will add additional provisions to ensure that each investor’s best interests are always placed first. Other firms might face a seismic shift to their compensation structure—from a commission-based, transactional business model to one that is fee-based and focused on total volume of assets managed. 

How will the rule change their advisory services and what needs to be relayed to existing clients?

Communication is just one portion of their challenges. A complete reevaluation of their business strategy and ability to meet increased compliance regulations will come first. Many firms have already begun adjusting or exiting the advisory business. MetLife recently sold their advisory business to MassMutual and experts expect more consolidation across the industry.

Rising standards, more risk

Heightened standards and investor protections bring increased compliance, costs and liability concerns. Experts are still studying the 1,000-plus page rule; however it is already clear that investors now have more ability to sue. Communication will be more important than ever in evaluating every external client and customer interaction. Marketing must not only be compliant, but it needs to still be effective and consistent, whether talking to a new potential customer considering a 401(k) rollover, or an existing client evaluating their financial plan. Determining the right messages that differentiate the brand while resonating with each target audience will be more important than ever.

The investment industry is in the early stages of transformational change. Brokers and advisors are for the first time competing on a level playing field when it comes to standards for offering investment advice. Now that almost everyone is playing by the same rules, it’s imperative to have strong communications counsel to help navigate the changing landscape.

Gregg Dinino is the PR Director at Roberts Communications and is adept at developing communications strategies that fully leverage earned media for our clients. He is a passionate advocate for integrating public relations, marketing and social media to best meet client objectives. With over 17 years’ experience in public relations and marketing, Gregg is a strategic thinker who has worked with health, wealth, and B2B brands such as Xerox, LPL Financial, MT Bank, Warner-Lambert, Schering-Plough, and Carestream Health.