DOL fiduciary rule takes effect June 9

Following the Great Recession, the Obama administration enacted a number of financial and banking regulations intended to lessen the chances of such an event occurring again. One such initiative was the fiduciary rule. An executive order signed by President Trump called for review of the regulation, and effectively delayed the rule – until now.

According to Alexander Acosta, the U.S. Secretary of Labor, the fiduciary regulation will move ahead as planned.

A partial implementation
Starting on June 9, the fiduciary rule will take partial effect. The goal of the regulation is to protect the investor, adding strict guidelines for financial advisors dealing with other people's money.

While the rule is still under review by the Department of Labor, the basic actions of the regulation will be in place June 9. The more complicated aspects of the law are being looked at by Acosta and his team as they field public comment regarding revisions, according to the New York Times.

The full rule will go into effect on January 1, 2018, barring any extra hesitations and updates.

"The Obama-era rule aims to protect investors' retirement funds."

The specifics
Under the rule, consultants handling their customer's retirement funds must put their client's interests ahead of their own. In addition, advisors can't charge any more than a reasonable amount for their services and although they can offer recommendations, they cannot make any misleading statements or suggestions that will put their well-being ahead of who they're working with, according to Forbes.

In short, the Obama-era rule wants financial consultants to act as trusted fiduciaries when working with money stemming from 401(k) and retirement plans.

The history
The fiduciary rule faced a rocky, uphill battle from the moment it was introduced in 2010. That first iteration was removed from consideration after widespread criticism. An amended version made the rounds in 2015 and was ultimately approved after undergoing public comment and hearings.

Despite various court battles in opposition to the rule, the regulation was supported by a Texas court in February before facing obstruction from a Republican-held White House and Congress.

Opposition to the rule
Although the Trump administration has called the rule into question, there are additional parties that are against the regulation.

Many people within finance believe the regulation will lead investors with less clout to raise fees, hurting their ability to bring in clients and give unbiased advice, according to USA Today. Complying with the rule and the loss of commission would cost smaller, independent professionals money.

A lot can happen between now and the full implementation of the fiduciary rule in January 2018. Many financial advisors and their investment firms have already begun to take steps to comply with the regulation. It's important for employees utilizing these consultants for their retirement accounts to understand the implications of the rule and their rights under the law.