Fiduciary Rule Basics for Investors
If you’re getting notices from your financial professional about changes in how they operate, it may be because of the new Department of Labor fiduciary rule. Here’s what retirement savers should know.


There has been quite a bit of news regarding the question of what an investment fiduciary is, based in part on protracted wrangling over a Department of Labor (DOL) ruling. Now that the new rules have taken effect (as of June 9, 2017) it’s time to review their finer points.
What is an investment fiduciary?
An investment fiduciary is a financial professional who is legally bound to act in the best interests of their clients. In the past, there was no legal requirement that financial professionals follow that standard, and not all of them did. Some, not me, chose to act in their own best interests or the best interests of the portfolio, leaving out the client’s needs or interests.
The old standard was akin to selling someone clothes that fit while the new standard is that the clothes have to fit while also making the customer look good. It’s a subtle yet significant change.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
How will the new fiduciary rule impact my relationships with clients?
It won’t impact my clients because it’s been my standard practice, since I started in the financial planning industry, to always provide services in a fiduciary capacity. I work on behalf of my clients and in their best interests. We work together to develop a financial strategy that we then implement to help them reach their goals, whether that’s to retire at a certain age, buy a home, get married, have kids or take a dream vacation.
What should every person who works with a financial adviser know about the fiduciary rule?
- The fiduciary rule applies to retirement accounts only at this time (including 401(k)s and IRAs funded with pre-tax money), but many financial firms are making the changes across the board under the assumption that all investments will be subject to the rule in the future.
- To provide a recommendation to a retirement investor, the recommendation needs to be in the best interest of the investor. But requirements including documenting an interest analysis are not required until Jan. 1, 2018.
- Financial professionals can charge no more than reasonable compensation. The question of what exactly that is remains unclear; most companies will set their own internal practices.
- Financial professionals should provide no leading statements about investment transactions, compensation, conflicts of interest, and tell the truth. At this time, there is no way to measure or police this regulation, so time will tell how effective it can really be.
What does this mean for retirement investment accounts?
As consumers, it means having a greater awareness and understanding of what your financial adviser is doing on your behalf when it comes to retirement and other investments. If you don’t have a clear understanding, ask questions, and if you don’t like the answers or your adviser doesn’t know the answer, it might be time to find a new financial adviser.
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Shanna Tingom is a registered representative, securities offered through Registered Representatives of Cambridge Investment Research, Inc., a Broker/Dealer, member FINRA/SIPC. Advisory services offered through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and Heritage Financial Strategies are not affiliated.
-
The $33,000 Retirement: One Man's Surprising Path to Financial Freedom at 61
Forget what society tells you, even with less than $1 million, you can be happy in retirement.
-
The Best Aerospace and Defense ETFs to Buy
The best aerospace and defense ETFs can help investors capitalize on higher government defense spending or hedge against the potential of a large-scale conflict.
-
Roth IRA Conversions in the Summer? Why Now May Be the Sweet Spot
Converting now would enable you to spread a possible tax hit over more than one payment while reducing future taxes.
-
A Financial Expert's Three Steps to Becoming Debt-Free (Even in This Economy)
If debt has you spiraling, now is the time to take a few common-sense steps to help knock it down and get it under control.
-
I'm an Insurance Expert: This Is How Your Insurance Protects You While You're on Vacation
Here are three key things to consider about your insurance (auto, property and health) when traveling within the U.S., including coverage for rental cars, personal belongings and medical emergencies.
-
Investing Professionals Agree: Discipline Beats Drama Right Now
Big portfolio adjustments can do more harm than good. Financial experts suggest making thoughtful, strategic moves that fit your long-term goals.
-
'Doing Something' Because of Volatility Can Hurt You: Portfolio Manager Recommends Doing This Instead
Yes, it's hard, but if you tune out the siren song of high-flying sectors, resist acting on impulse and focus on your goals, you and your portfolio could be much better off.
-
Social Security's First Beneficiary Lived to Be 100: Will You?
Ida May Fuller, Social Security's first beneficiary, retired in 1939 and died in 1975. Today, we should all be planning for a retirement that's as long as Ida's.
-
An Investment Strategist Demystifies Direct Indexing: Is It for You?
You've heard of mutual funds and ETFs, but direct indexing may be a new concept ... one that could offer greater flexibility and possible tax savings.
-
Q2 2025 Post-Mortem: Rebound, Risks and Generational Shifts
As the third quarter gets underway, here are some takeaways from the market's second-quarter performance to consider as you make investment decisions.