The fiduciary standard binds many financial advisors and is in the nature of their professional certification and business practice. (Getty Images/iStockphoto/guest)

Oh, what a tangled web we’ve spun about fiduciary standards and financial advice in recent years.

For those of you with long memories, you might recall the U.S. Department of Labor took eight years to write the fiduciary rule, which, in essence, required financial professionals to act in the best interest of their client, eliminate conflicts of interest and promote transparency in all dealings. The fiduciary rule was completed in the twilight of the Obama Administration.

The Trump Administration wasn’t a fan of the regulation, and industry groups challenged it in court. The U.S. Court of Appeals for the Fifth Circuit overturned the fiduciary rule change in 2018, saying that the Labor Department had overreached.

The Biden Administration has come out with a fiduciary rule focused on retirement accounts. The rule provides that a financial advisor has fiduciary obligations if they receive compensation to offer investment advice or make investment recommendations to retirement investors, including participants in 401(k)s and IRAs. The new rule, slated to go into effect on Sept. 23, clarifies when financial professionals must act as fiduciaries.

“The net effect: Anyone who holds themself out as a trusted advisor when providing advice will become an investment advice fiduciary, meaning they must put the investor’s interests ahead of their own,” according to a smart analysis by Morningstar, the investment information service.

The new rule offers substantial benefits for the typical saver in 401(k)s, IRAs and similar retirement savings plans. Common sense suggests anyone working with a professional advisor assumes that person is acting in their best interest. Yet, once again, industry groups have sued to block the latest Labor Department effort.

The good news in a market economy is you get to choose who to do business with, and the fiduciary standard binds many financial advisors. The fiduciary standard is in the nature of their professional certification and business practice. There are many good reasons for retirement savers to seek professional guidance but choose to work with a fee-only adviser legally bound to act as a fiduciary.

The fiduciary standard is only part of your exploration to find the right advisor for you, of course. Among other aspects, you still need to learn more about the advisor’s business approach, money management and communication strategy with clients. But the fiduciary standard makes for an easy baseline decision before starting additional research.

Chris Farrell is senior economics contributor, “Marketplace”; commentator, Minnesota Public Radio.