On June 9, a new fiduciary rule became effective that now requires financial advisers to put their clients’ interests first when giving advice about retirement accounts such as a 401(k).

Last week, I invited Barbara Roper, director of investor protection for the Consumer Federation of America to answer questions about the rule.

Lots of investors are concerned about the changes their advisers are implementing to comply with the rule. Roper did a great job pointing out the incorrect way firms and individual planners are interpreting the fiduciary rule.

Q: I’ve read that a number of brokerages, to comply with the Department of Labor’s fiduciary rule, are shifting smaller nest eggs from commission-based accounts into fee-based, “advisory” accounts. What should I be worried about and what questions should I be asking my financial advisor in this case?

Roper: While some brokers are shifting retirement accounts to fee accounts, many continue to offer commission accounts. Where both options are available, the rule requires the broker to recommend the option that is best for the customer. The first question you should ask is what fee you will be charged and how that compares to your average commission costs for the past several years. If the cost of the advice is going up, are you getting valuable new services that you want and need? Or will you pay lower costs on the investment recommendations to make up the difference? If not, you should ask on what basis the adviser determined that this was your best option. If you don’t like the answers you get, shop around for a different firm that offers the services you want and need and allows you to pay for them in the way you prefer. There are lots of options out there, and you may find you get better advice at a lower cost if you are willing to shop around.

Q: My adviser says I am not allowed to make random deposits. Must be monthly. It’s definitely not what I want. I have to leave two IRAs alone and open a third for a lump sum. Confusing and dumb. Thoughts?

Roper: If your adviser is limiting your ability to make random deposits, that is a choice they are making, not a requirement of the rule. If it is a minor annoyance and you are otherwise happy with the services you are getting, you can put up with it. Otherwise, you can shop around for a firm that doesn’t impose these sorts of arbitrary restrictions.

Singletary: I jumped in on this question, too, because I’m getting a lot of email from folks who say their adviser is telling them they can’t do one thing or the other because of the new rule.

It’s hogwash!!

They either don’t want your account, in which case fine, kick them to the curb because there are plenty of firms that do; are being overly cautious, which is understandable because it’s a new rule; don’t understand the rule, or they are trying to force you into a “managed” account, which will make them more money.

Robo-advisers are here. What’s a human financial planner to do?

Q: I was told by my adviser that the companies had changed all of their IRA accounts to being charged a yearly percentage of a person’s balance (1 percent). I am currently charged per investment/transaction because I do not trade very frequently. I told her if that were the case, I would probably be changing companies. She said “good luck in finding one that won’t be making this change!” If this is in fact true, it looks like this new fiduciary ruling has backfired on the everyday IRA account holders like myself.

Roper: There are many firms that have publicly announced that they will continue to offer commission accounts under the rule. There are also fee accounts where the costs are so low that even investors who trade infrequently can see lower costs than they pay in commission accounts. So if your firm isn’t willing to serve you on the terms you prefer, find one that will.

Q: What part of my investment portfolio does the fiduciary rule apply to?

Roper: The rule applies to advice regarding Individual Retirement Accounts (both Roth and traditional), including rollover recommendations. It also applies to workplace retirement plans, such as 401(k)s and SEP and SIMPLE IRAs. Some 403(b) plans are also covered, but others, such as K-12 403(b)s, unfortunately are not. It does not apply to non-retirement accounts.

Q: I am thinking about leaving my job and rolling over the money in my workplace 401(k) account into an IRA. If I ask a professional investment adviser for advice about how to invest the funds now that they are in the IRA, does the new rule provide me with new protections?

Roper: The new rule requires both that any recommendation to rollover the money has to be in your best interests, and that any advice about how to invest the money in the IRA also meets that standard. In addition, the fees have to be reasonable, the firm has to eliminate harmful conflicts, and the adviser can’t make misleading statements. We believe that will greatly improve the quality advice that you and others in your situation receive.

Singletary: Make sure before moving out of your workplace fund to compare costs. If you like the investment options in your plan, and fees are low or reasonable, why move?

When I retire, I’m not leaving my plan. Why? The fees are super low compared to what I would get with any adviser or firm. And the options are great (Vanguard).

Read this from Bankrate.com: 6 reasons not to roll over your 401(k)

Q: Please explain the fiduciary rule and its pros and cons.

Roper: The rule requires all financial professionals who give investment advice to retirement savers to act in their customers’ best interests, charge reasonable fees and refrain from making misleading statements. It also requires firms to eliminate incentives that encourage and reward advice that is not in customers’ best interests. That’s a big deal, and it is already changing the products recommended and the way advisers are paid. But the rule has not been fully implemented, and IRA investors in particular won’t get the full benefits of the rule until that occurs. And, of course, it only applies to retirement accounts. So if you are getting advice from a broker-dealer or insurance agent, the rest of your accounts will still be governed by the weaker “suitability” standard.

Q: How will the rule be enforced?

Roper: This is a simple question, with a surprisingly complex answer. For advice to retirement plans (such as 401(k) plans) and advice about rollovers, the Department of Labor has direct enforcement authority. For now, they’ve said they won’t bring enforcement actions where they see a good faith effort to comply. The idea is to guide firms into compliance instead of hitting them with a penalty when they are doing their best to come into compliance. There is also a private enforcement mechanism for this sort of advice, which will help to create a strong incentive for firms to comply. Unfortunately, the enforcement mechanism for advice to individual IRA investors isn’t due to come into effect until January 2018, and could well be further delayed. These investors will have to continue to be on their guard against advice that is not in their best interests.

Retirement rants and raves
This is your space. It’s an opportunity for you to share your experiences or concerns about retirement. You can rant or rave. Send your comments to colorofmoney@washpost.com. Please include your name, city and state. In the subject line put “Retirement Rants and Raves.”

Bob Nadvornick from Montana had a question about becoming more financially conservative as he heads into retirement.

“I have saved all my life for the golden years,” Nadvornick wrote. “Now that I am close to where I need to be, I have gone ultra conservative with my retirement accounts, putting most of my accounts into CDs and bonds so I don’t lose what I have saved. With the stock market doing so well since Trump took office, I feel like I am missing the boat with these conservative investments. But at my age, I would rather be safe than sorry if the market does take a dive. Am I on the right track, or should I change directions?”

You certainly want to be sure you aren’t risking all your retirement funds in the stock market but you also should consider that you might live an additional 20 or 30 years. And we have a growing population of people living into their 90s.

Here’s some reading for Bob and you if you’re afraid to leave some of your money in the stock market.

Four Factors That Could Derail Your Retirement — and What to Do About Them

One of the factors is investing too conservatively.
As Christy Bieber wrote recently for the Motley Fool, “Close to 60 percent of investors across all age groups focus more on avoiding losses than maximizing investment growth, and 52 percent of seniors 60 and older are focused primarily on loss avoidance, according to a 2016 Wells Fargo survey. The idea that seniors should be invested in risk-free bonds is an outdated one, given that Americans are living longer and bonds now provide almost no return on investments.”

For your retirement planning, count on living until age 95

Your Greatest Risk to a Secure Retirement: Living Longer

Newsletter comments policy
Please note it is my personal policy to identify readers who respond to questions I ask in my newsletters. I find it encourages thoughtful and civil conversation. I want my newsletters to be a safe place to express your opinion. On sensitive matters or upon request, I’m happy to include just your first name and/or last initial. But I prefer not to post anonymous comments (I do make exceptions when I’m asking questions that might reveal sensitive information or cause conflict.)

Have a question about your finances? Michelle Singletary has a weekly live chat every Thursday at noon where she discusses financial dilemmas with readers. You can also write to Michelle directly by sending an email to michelle.singletary@washpost.com. Personal responses may not be possible, and comments or questions may be used in a future column, with the writer’s name, unless otherwise requested. To read more Color of Money columns, go here.