What the New Fiduciary Rule Means for Financial Institutions and Your Consumers
Yesterday the Biden administration and DOL announced the new 'fiduciary rule' proposal which widens both the types of investments and activities governed by the best interest guidelines. The overarching goal of the fiduciary rule is to ensure advisors aren't incentivized by fees when making investment recommendations on retirement accounts. The proposal updates the 1975 fiduciary language which was put in place before the mass adoption of IRAs and before the existence of 401Ks. The administration estimates that fixed annuities alone cost savers $5b in fees in 2023.
In summary the proposed rule changes
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Expand coverage of products that must be in savers 'best interest'
The rule proposes that commodities and insurance products (for example fixed annuities) be governed by the federal rules. The proposal would require that BOTH securities and insurance products be in the best interest of the saver.
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Capture retirement account rollovers
Rollovers were historically exempt from best interest rules but would also be covered. The rollover/ consolidation of retirement accounts is perhaps one of the biggest decisions that consumers make.
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Extend coverage to advice provided to plan sponsors
Advisors who make recommendations to plan sponsors would be captured by the best interest requirements.
What does this mean for financial institutions and your consumers in 2024?
Our data shows that members using Silvur will move over 50% of their tracked retirement savings in the next 3 years. The most common 'move' is a 401k/ 403b rollover to the consumer's PFI for retirement. Financial institutions have an opportunity to double down on your mission for financial wellness and show consumers that you are here to ensure their hard earned retirement savings fund their retirement.
How Silvur can help you in 2024!
Silvur's data platform helps your team identify consumers who are most likely to move assets in the next 3 years so you can grow your share of the retirement wallet. We also flag which consumers are getting ready to retire ensuring you don't lose direct deposit/ PFI status.
