A new rule should cut down on conflicts of interest in the advice given to investors about their retirement accounts — but it’s raised a lot of questions, too. (istock)

Despite a lot of pushback from financial-services firms, a new rule should cut down on conflicts of interest in the advice given to investors about their retirement accounts.

But based on what I’m hearing from readers, people have a lot to learn about the Labor Department’s fiduciary rule, which requires financial professionals to put their clients’ interests first. To help sort through the confusion that often comes with new rules, Barbara Roper, director of investor protection for the Consumer Federation of America, has been helping me respond to reader queries. Here are some that she couldn’t get to during a recent online discussion.

Financial services companies say they oppose the rule because they are looking out for small investors who, according to the firms, won’t be able to get adequate investment advice under the new rule. Since when does this industry care about the little guy?

Roper: Industry rule opponents hit on this argument because it sounds a lot better than admitting that you just really don’t want to be legally accountable for acting in customers’ best interests. We at the CFA believe small investors, who are most likely to get investment advice from brokers and insurance agents who have not previously been held to a fiduciary standard, will be the biggest beneficiaries of the rule. They will no longer have to give up their right to best-interest advice.

And early experience since firms began announcing their implementation plans for the rule clearly shows that there are firms who are willing to serve even the smallest retirement accounts under a fiduciary standard.

Does “in my best interest” always mean the least expensive option, or are there some other criteria that an adviser uses?

Roper: While minimizing costs is important, the lowest-cost option is not always the best option, and the Labor Department rule does not require advisers to recommend the least expensive investment. Instead, they are required to consider a range of factors — such as the investment’s risk profile, liquidity, performance history, compatibility with the investor’s risk tolerance and goals.

In light of the new rule, should I be keeping all my previous commission-based products? Is it okay to ask my adviser to prove that these products are in my family’s best financial interest? If so, what do I ask?

Roper: The rule offers an excellent reason to initiate a conversation with your adviser about the advice you have received, and will continue to receive in non-retirement accounts, that has not been governed by the fiduciary standard. That doesn’t mean you should run out and dump your commission products.

Some may, in fact, meet the best-interest standard. In other cases, costs associated with selling and replacing the investment wouldn’t be worth it. It is absolutely appropriate for you to ask your adviser to describe whether and how your current holdings meet a best-interest standard. Follow up by asking more specifically whether there are other options available that would be better for you — with lower costs; a better performance record; greater liquidity; or other, more investor-friendly, features — and why they didn’t recommend those.

If you feel like you are getting the runaround, that’s a major red flag. You may want to start looking around for a different adviser -- one who will act in your best interests for all your accounts, not just your retirement accounts.

I was given information in preparation for the fiduciary rule for my retirement account. It would make the account I have at an investment company a “self-directed account” or I could receive “personalized investment guidance” if I switched to a portfolio with a much larger number of investments. Is this because of the new regulations?

Roper: It sounds as though you are being offered a choice between a plain vanilla self-directed account, with no advice and limited investment options, and a fee account, with advice and a broader array of investment options. What you haven’t mentioned, however, is how much each account would cost, how much you trade, how confident you are making your own investment decisions, or how much you rely on an adviser for recommendations. Those are all factors you would have to consider in making this choice. But it may be that you don’t find either option particularly attractive. If that’s the case, by all means shop around for a new firm that doesn’t offer such a limited array of choices.

If you have additional questions about the new fiduciary rule, send them to colorofmoney@washpost.com.