BusinessConflicting investment advice has long been an issue in the investing world. Specifically, when a person leaves a company with a 401(k) plan, he or she may receive different views on what to do when transferring the money to an IRA. Transferring this money correctly can be the difference between a relaxing retirement, and having to go back to work when retirement savings disappear. The government has been working to remedy this for quite some time, and, finally, the Obama Administration acted by implementing a new rule stating that financial advisors must act in their clients’ best interests.

This major step forward in consumer protection is expected to take place in April of 2017. It makes it the law for investors in charge of retirement accounts to handle the money in a way that gives clients the largest returns. It will have the biggest bearing on the middle class, who start retirement accounts early and rely on advisors to make the most out of their money. Many individual investors live under the impression that their financial advisors are already required to act in their best interests. This law takes things one step forward by making it law for advisors to do right by their clients.

This rule is being put into effect at a time in which a low percentage of Americans are confident in their retirement savings. Over half of Americans polled by the Employee Benefit Research Institute reported that they did not feel they were on track with their retirement savings. Currently, advisors are allowed to suggest avenues of investing retirement money that are merely okay, or ‘suitable,’ for the account, as opposed to what may save the most money. This new rule will turn how investors approach accounts around.

Many financial advisors, however, are not happy. Large financial firms have opposed this rule since they began negotiating years ago. They argue that government intervention in their firms will lead to compliance issues, driving up the costs of advice and cutting down client base. However, a study by the Certified Financial Planner Board of Standards suggested this would not be the case.

This new rule, when it is put into effect, has the ability to open up a conversation between investors and advisors that was previously blocked off. Investors will be able to ask how much money advisors are making on their account, for example, while knowing that the advisor is legally bound to acting in their best interest. It will be fascinating to see how this rule will unravel in the financial world.