U.S. consumers are less trusting of stockbrokers than of either lawyers or Uber drivers, according to a new survey from Redwood City, Calif.-based Personal Capital Corp. designed to assess public understanding of fiduciary standards and trust in the investment industry.
The financial services firm reports that its survey of almost 1,400 U.S. consumers found that Americans don’t necessarily understand the phrase “fiduciary standard,” but that they prefer their stockbrokers adhered to it. In particular, the survey found that 22% of participants admitted that they are unaware of the difference between a stockbroker and a financial advisor; 34% admitted they don’t know what the fiduciary standard means; and 12% confused “fiduciary” with “judiciary.”
Yet, despite this confusion, the survey also found that 93% of respondents indicated that stockbrokers should be legally required to act in their clients’ best interest — and 94% of respondents said they would seek out alternative advice if they knew their stockbrokers were not required to provide advice in their best interest. However, 51% also believe ethical standards for stockbrokers are already the law.
The survey comes amid an ongoing public debate in the U.S. about a proposed rule that would impose a fiduciary standard for retirement advice. Canadian regulators are also contemplating whether advisors here should also be required to adhere to some form of best interests standard.
“A move toward the fiduciary standard is long overdue and has the potential to clean up the financial services industry for the benefit of investors,” says Bill Harris, founder and CEO of Personal Capital, in a statement. “Retirement savers should be able to know that the advice they receive is from a fiduciary serving their best interest and not accompanied by hidden fees. That kind of opacity is predatory and should be a thing of the past.”
In fact, only 30% of respondents are extremely, or very, confident that they know all of the fees they pay to their investment advisor or stockbroker. Another 29% are somewhat confident, while 41% are either not so confident, or not at all confident.
The survey was conducted online by a third party on behalf of Personal Capital from June 4 through 7 among 1,391 American adults aged 18 and older.