The long-running game of "will it, will it not" is over: The fiduciary rule is now live.
The initial rollout of the rule, which was designed under the Obama administration to protect retirement investors from unnecessarily high costs and conflicts of interest in the financial advice industry, was delayed in April after President Trump asked the Department of Labor to reevaluate the rule.
That review is expected to continue through Jan. 1 of next year, but portions of the rule took effect June 9.
Here are three reasons investors should care about this rule.
1. Your adviser will now have to act in your best interest. You might think your adviser was already doing this, and in many cases, you would be right. But under the fiduciary rule, it will be a matter of law. Formerly held to only a suitability standard, advisers who provide advice to retirement savers will now be required to be fiduciaries.
The difference is notable. Under a suitability standard, advisers can recommend the investment that pays them or their firm the highest commission, as long as it is suitable for your needs. Under a fiduciary standard, the adviser focuses solely on what is best for you, which can lead to lower costs and better products.
The fiduciary rule applies only to advice involving investments in retirement accounts, such as IRAs.
2. It will bring transparency to fees. Conflicted advice often means lower returns and higher fees for investors, according to a report by the Council of Economic Advisers.