The Department of Labor’s new regulation expanding fiduciary responsibility to advisors of 401k plans and IRAs—requiring all professionals to recommend what is in the “best interests” of their clients—will undoubtedly have an impact on both consumers and on the wealth management industry as a whole. A.T. Kearney’s research shows a $20 billion revenue impact for the industry through 2020.

1. The $20 Billion Impact of the
New Fiduciary Rule on the U.S.
Wealth Management Industry
2016 DOL Fiduciary Rule Study

2. 2016 DOL Fiduciary Rule Study
On April 6, 2016, the U.S.
Department of Labor released
the final version of its new
regulation expanding fiduciary
responsibility to advisors of
401K plans and IRAs—requiring
all professionals to recommend
what is in the “best interests”
of their clients.

3. Our studies reveal that the rule will
make a $20 billion revenue impact
for the industry through 2020, along
with significant asset shifts across
players and formats within the wealth
management value chain.
2016 DOL Fiduciary Rule Study

4. 2016 DOL Fiduciary Rule Study
Industry players will
be impacted differently,
but all must aggressively
address these changes
in order to remain
competitive
and viable.

5. Wirehouses will accelerate their ongoing
transition to fee-based advisory, while
capitalizing on their ability to continue
to sell high-fee proprietary products
following the most recent rule revision.
2016 DOL Fiduciary Rule Study

6. Broker/dealers will see a significant
sales impact as high-commission
products (such as annuities) lose
favor. Additionally, consolidation
will likely occur as smaller
independent broker/dealers
struggle to comply with
the new rule.
2016 DOL Fiduciary Rule Study

7. 2016 DOL Fiduciary Rule Study
Independent broker/dealers will face
the largest disruption, as the rule
will strain the resources of smaller
players. This will drive industry
consolidation and the potential
outflow of advisors to other
distribution formats, like
dual RIAs.

8. Dual RIAs will see their business
model shift as “hybrids” focus
in the near term on building
their RIA businesses. Along
with others in the industry
they will accelerate the
transition to more
fee-based advisory.
2016 DOL Fiduciary Rule Study

9. 2016 DOL Fiduciary Rule Study
RIAs, who already operate under
similar fiduciary standards,
will stand to gain significant
market share as many are
already equipped to
comply with
the rule.

10. Robo-advisory adoption will
accelerate as accounts flow away
from broker/dealers and undersized
accounts are dropped as fee-based
advisory changes the economics
for managed advice.
2016 DOL Fiduciary Rule Study

11. Self-directed plans will benefit from
these trends, as accounts that don’t
flow into robo-advisory will go directly
into mutual funds and exchange-traded
funds. Products will also likely
be streamlined as high-fee,
low-performance funds
lose favor.
2016 DOL Fiduciary Rule Study

12. Retirement plan administrators, most
of whom play other roles in the value
chain, will need to reconsider
their business model as their
significant revenue source
(12b-1 fees for product
placements) will come
under pressure.
2016 DOL Fiduciary Rule Study

13. Manufacturers will experience
significant asset flows and will
be incentivized to streamline
product offerings, lower
fees, and improve
performance.
2016 DOL Fiduciary Rule Study

14. To learn more about the expected
impact on assets and revenues
by 2020 visit:
www.atkearney.com/financial-institutions/
dol-fiduciary-rule
2016 DOL Fiduciary Rule Study