2010 fsi q1 survey results

DALBARThe Measurement of Success

617-723-6400 DALBAR.COM

FSI Quarterly SurveyAwareness Questionnaire

Q1 2010


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FSI Quarterly Survey

Awareness Questionnaire Q1 2010

Table of Contents

5About Survey Participants – Advisors

34Expanded disclosure of compensation and potential conflicts of interest - Advisors

31Expanded role of FINRA in regulation of non-security products/services – Broker Dealers

28Expanded role of FINRA in regulation of non-security products/services - Advisors

22Restrict use of independent contractor status for RR’s - Advisors

25Restrict use of independent contractor status for RR’s – Broker Dealers

19Adoption of a uniform fiduciary standard for all advisers (RR’s & IAR’s) – Broker Dealers

13Changes to rule 12b-1 that limit this form of compensation – Broker Dealers

16Adoption of a uniform fiduciary standard for all advisers (RR’s & IAR’s) – Advisors

10Changes to rule 12b-1 that limit this form of compensation – Advisors

8About Survey Participants – Broker Dealers

4Purpose, Process & Methodology

Expanded disclosure of compensation and potential conflicts of interest – Broker Dealers 37

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68About DALBAR, Inc.

66Client Relationship Following Market Turmoil – Broker Dealers

61Mandatory lifetime income option for 401(k) plans – Broker Dealers

64Client Relationship Following Market Turmoil - Advisors

58Mandatory lifetime income option for 401(k) plans - Advisors

52Definition of 401(k) plan advisers as ERISA fiduciaries - Advisors

55Definition of 401(k) plan advisers as ERISA fiduciaries – Broker Dealers

49401(k) advice regulations to plans and participants – Broker Dealers

46401(k) advice regulations to plans and participants - Advisors

43Mandatory automatic IRAs for employers with no other retirement plan – Broker Dealers

40Mandatory automatic IRAs for employers with no other retirement plan - Advisors

Table of Contents

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Purpose, Process & Methodology

• Purpose• The purpose of this project was to gauge levels of awareness and/or concern within the investment advisory industry about a certain selection of topics.

• Process•Invitations were sent to members of the Financial Services Institute to participate in a survey created and implemented by DALBAR, Inc.

• Methodology• 12,248 financial advisers and 1,836 broker/dealer were asked toparticipate.

• The survey was conducted between 01/22/10 and 01/27/10

• 380 financial advisers and 72 B/Ds responded, representing response rates of 3% and 4%, respectively

• Margins of error were 5% and 11% respectively • 95% confidence level

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Additional Resources• Results from this survey are presented in this report in the form of

statistics, without segmentation analysis, opinion or commentary.• Further insights into the issues reported here are available from

DALBAR through supplemental reports and in-person presentations.• Available supplements include:

– Analysis and recommendations for taking advantage of the results.– Discussion of practices currently underway in the industry– Recasting results in a form more suitable to a specific firm. – Cross-tabulations that reveal a variety of subsets of the aggregate data

presented here.– Customized surveys of advisers and/or clients.

• For further information contact:

DALBAR, Inc.Attn: Survey ResearchFederal Reserve Plaza600 Atlantic AvenueBoston, MA 02210

[email protected]

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About Survey Participants – Advisors

Under what structure(s) do you operate?

How long have you worked in the securities industry?

What products do you use on a regular basis?

Which category(ies) best describe your primary revenue source(s)?

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Under what structure(s) do you operate?

How long have you worked in thesecurities industry?

6-10 years9.8%

Over 1087.8%

0-5 years2.4%

72.9%

28.7%

55.8%

18.7%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

Registered Rep OSJ IAR of B/D's RIA Own RIA

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What products do you use on a regular basis?

Which category(ies) best describe Your primary revenue source(s)?

54.2%

97.6%

40.3% 38.4%

32.1%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Stoc

ks &

Bon

ds

Mut

ual F

unds

401

(k)

Altern

ativ

e In

vest

.

Other

69.21%

36.05%

51.58%

3.42%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

Fee

Base

d

Annu

ity/

Insu

ranc

e

IRAs

& R

ollo

vers

Inst

itutio

ns

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About Survey Participants –Broker/Dealers


What is your primary area of responsibility?

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What is your primary area of responsibility?

0-5 years5.6%

6-10 years12.5%

Over 1081.9%

Admin.12.5%

Legal or Compl.44.4%

Sales15.3%

Ops.13.9%

Branch Offices1.4%

Other9.7%

Capital Markets

1.4%

IT1.4%

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Changes to rule 12b-1 that limit this form of compensation - Advisors

How aware are you of proposals to limit the use of 12b-1?

How concerned are you about potential limits to 12b-1?

What actions have you taken to prepare for limits to 12b-1?

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How aware are you of proposals to limit the use of

12b-1?

How concerned are you aboutpotential limits to 12b-1?

Highly Aware35.9%

Generally Aware36.5%

Unaware1.5%

Somewhat Aware26.0%

No concern4.5%

Somewhat Concerned

15.0%

Concerned18.0%

Very Concerned

62.6%

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None61.9%

Developed a strategy21.5%

Plans are in place

14.5%

Have pilot program

2.1%

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Changes to rule 12b-1 that limit this form of compensation –Broker/Dealers

How aware are you of proposals to limit the use of 12b-1?

How concerned are you about potential limits to 12b-1?


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How aware are you of proposals to limit the use of

12b-1?

How concerned are you aboutpotential limits to 12b-1?

Highly Aware55.2%

Somewhat Aware12.1%


Very Concerned

70.2%

Concerned14.0%

Somewhat Concerned

14.0%

No concern

1.8%

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None73.7%

Developed a strategy

17.5%

Plans are in place7.0%

Have pilot program

1.8%

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Adoption of a uniform fiduciary standard for all advisers (RRs & IARs) – Advisors

How aware are you of fiduciary standards being proposed?

How concerned are you about a new fiduciary standard?

What actions have you taken to prepare for a new standard?

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Very Concerned

22.1%

Somewhat Concerned

58.6%

No concern19.3%

How aware are you of fiduciary standards being

proposed?


Highly Aware29.5%


Somewhat Aware24.4%

Unaware6.9%

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None67.0%


Plans are in place

14.7%

Have pilot program

0.9%

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Adoption of a uniform fiduciary standard for all advisers (RRs & IARs) – Broker/Dealers




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Somewhat Aware7.0%

Highly Aware63.2%

Unaware1.7%

Very Concerned

40.4%

Somewhat Concerned

49.1%

No concern10.5%

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None56.4%

Plans are in place

10.9%


Have pilot program

1.8%

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Restrict use of Independent Contractor status for RRs – Advisors

How aware are you of proposals to limit Independent Contractors?

How concerned are you about Independent Contractor limits?

What actions have you taken to prepare for limits?

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How concerned are you about Independent contractor limits?

Highly Aware40.7%


Somewhat Aware21.0%

Unaware10.2%

Very Concerned

70.4%

Concerned13.8%

Somewhat Concerned

11.0%

No concern4.8%

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None88.6%


9.3%


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Restrict use of Independent Contractor status for RR’s – Broker/Dealers


How concerned are you about Independent Contractor limits?


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How concerned are you aboutIndependent Contractor limits?

Very Concerned

68.4%

Concerned14.0%

Somewhat Concerned

12.3%

No concern5.3%

Highly Aware68.4%

Somewhat Aware5.3%


Unaware3.5%

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None78.2%



14.6%

Have pilot program

3.6%

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Expanded role of FINRA in regulation of non-security products/services – Advisors

How aware are you of the FINRA non-securities proposal?

How concerned are you about the FINRA proposal?

What actions have you taken to prepare for a new FINRA role?

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Highly Aware10.5%


Somewhat Aware24.9%

Unaware44.5%

Very Concerned

23.8%

Somewhat Concerned

29.6%

No concern21.5%

Concerned25.1%

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None92.3%


Have pilot program

1.9%Developed a strategy

3.2%

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Expanded role of FINRA in regulation of non-security products/services –Broker/Dealers




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Highly Aware36.8%


Somewhat Aware26.3%

Unaware15.8%

Concerned21.8%

No concern7.3%

Somewhat Concerned

34.5%

Very Concerned

36.4%

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None88.7%


7.5%

Plans are in place

1.9% Have pilot program

1.9%

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Expanded disclosure of compensation and potential conflicts of interest –Advisors

How aware are you of proposals to expand disclosures?

How concerned are you about expanded disclosures?

What actions have you taken to prepare for disclosures?

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Highly Aware14.4%


Somewhat Aware35.9%

Unaware18.0%

Very Concerned

19.8%

Somewhat Concerned

35.4%

No concern16.5%

Concerned28.3%

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Have pilot program

0.6%


7.3%


None83.9%

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Expanded disclosure of compensation and potential conflicts of interest –Broker/Dealers




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How concerned are you aboutexpanded disclosures?

Highly Aware29.8%Somewhat

Aware21.1%

Unaware8.8%


Very Concerned

21.4%

Concerned41.1%

Somewhat Concerned

30.4%

No concern7.1%

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None60.4%


Plans are in place

11.3%

Have pilot program

3.8%

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Mandatory automatic IRAs for employers with no other retirement plan – Advisors

How aware are you of proposals for automatic IRAs?

How concerned are you about the proposals for automatic IRAs?

What actions have you taken to prepare for automatic IRAs?

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How concerned are you about theproposals for automatic IRAs?

Highly Aware5.6%


Somewhat Aware32.6%

Unaware33.2%

Very Concerned

11.7%

Concerned20.2%

Somewhat Concerned

36.5%

No concern31.6%

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None94.8%

Plans are in place2.0%Developed a

strategy2.9%

Have pilot program

0.3%

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Mandatory automatic IRAs for employers with no other retirement plan –Broker/Dealers




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Highly Aware2.0%

Somewhat Aware35.3%


Unaware25.5%

Very Concerned

6.0%

Concerned24.0%

Somewhat Concerned

40.0%

No concern30.0%

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None97.9%


2.1%

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401(k) advice regulations to plans and participants – Advisors

How aware are you of the status of advice regulations?

How concerned are you about new advice regulations?

What actions have you taken to prepare for new regulations?

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How concerned are youabout new advice regulations?

Highly Aware12.6%


Somewhat Aware36.5%

Unaware17.3%

Concerned29.1%Somewhat

Concerned37.3%

No concern16.0%

Very Concerned

17.6%

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None84.2%


8.1%


Have pilot program

0.6%

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401(k) advice regulations to plans and participants – Broker/Dealers


How concerned are you about new advice regulations?


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How concerned are youabout new advice regulations?

Highly Aware39.2%


Somewhat Aware21.6%

Unaware2.0%

Very Concerned

34.0%

Concerned36.0%

Somewhat Concerned

28.0%

No concern2.0%

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None60.4%


Plans are in place

10.4%

Have pilot program

2.1%

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Definition of 401(k) plan advisers as ERISA fiduciaries – Advisors

How aware are you of plan to make plan advisers fiduciaries?

How concerned are you about plan advisers as fiduciaries?

What actions have you taken to prepare for fiduciary status?

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How concerned are youabout plan advisers as fiduciaries?

Highly Aware21.6%


Somewhat Aware30.1%

Unaware15.1% Very

Concerned22.6%

Concerned25.8%

Somewhat Concerned

31.2%

No concern20.4%

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None79.2%


9.3%


Have pilot program

2.2%

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Definition of 401(k) plan advisers as ERISA fiduciaries – Broker/Dealers




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Somewhat Aware13.7% Highly Aware

33.3%

Unaware7.9%

Concerned30.6%

Somewhat Concerned

28.6%

No concern12.2%

Very Concerned

28.6%

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None56.2%

Plans are in place

16.7%


Have pilot program

4.2%

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Mandatory lifetime income option for 401(k) plans – Advisors

How aware are you of proposals for a lifetime income requirement?

How concerned are you about the lifetime income requirement?

What actions have you taken to prepare for the requirement?

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Highly Aware7.2%


Somewhat Aware27.5%

Unaware48.7%

Very Concerned

15.0%

Concerned25.0%

Somewhat Concerned

36.0%

No concern24.0%

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None93.4%

Plans are in place2.3% Have pilot

program0.3%Developed a

strategy4.0%

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Mandatory lifetime income option for 401(k) plans – Broker/Dealers




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How concerned are you aboutthe lifetime income requirement?

Highly Aware7.8%


Somewhat Aware43.1%

Unaware31.4%

Very Concerned

10.6%

Somewhat Concerned

42.6%

No concern27.7%

Concerned19.1%

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None95.4%


2.3%


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Client Relationship Following Market Turmoil – Advisors

How has the trust of your clients changed since 2008?

How has client loyalty changed since 2008?

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More Trusting41.1%

No Change47.4%

Less Trusting11.5%

More Loyal36.8%

No Change54.8%

Less Loyal8.4%

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Client Relationship Following Market Turmoil – Broker/Dealer



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More Trusting18.2%

Less Trusting27.3%

No Change54.5%

More Loyal18.2%

No Change59.1%

Less Loyal22.7%

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• DALBAR, Inc., the nation’s leading financial services market research firm, continues its nearly three-decade commitment to raising the standards of excellence in the industry. With offices in the U.S., Canada, and London, DALBAR develops standards for, and provides research, ratings and rankings of, intangible factors that influence the overall customer service experience in the mutual fund, broker/dealer, managed account, retirement plan, life insurance, and property and casualty insurance industries. Such factors include print communications, Web, interactive voice response, call center, and financial professional touch points. www.dalbar.com

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