I was involved in an interesting exchange on Facebook recently.

Some of my followers were debating the merits of the Department of Labor’s “fiduciary rule,” which is slated to take effect April 10 – although the Trump administration has signaled that it may look to delay the implementation. It became clear to me that many people didn’t really understand what is at stake.

The rule would require financial professionals to put their clients’ best interests first when giving investment advice on saving for retirement.

Consumer advocates favor the rule. Many financial companies and associations hate it.

By law, an investment adviser who has a “fiduciary duty” must act in the best interests of clients. But investment professionals who are not fiduciaries don’t have to adhere to this standard. Instead, the law says they have to only make sure their advice is “suitable” for the client.

The distinction is important because there’s concern that back-door incentives may result in advisers recommending an investment that makes him or her more money but that is not in the best interest of the client.

Earlier this month, President Trump issued a memorandum ordering the Labor Department to “examine the fiduciary duty rule to determine whether it may adversely affect the ability of Americans to gain access to retirement information and financial advice.” He directed the department to “prepare an updated economic and legal analysis.”

You really think this rule hasn’t already gone through years of analysis?

It’s been at least six years in the making. The Labor Department received more than 3,000 comment letters. A 2015 report from the White House Council of Economic Advisers, using independent research, estimated that conflicted advice cost investors $17 billion a year.

For the Color of Money Book Club for this month, I’m recommending you read for yourself what the fiduciary rule will do. At dol.gov, search for “Conflict of Interest Final Rule.” You’ll find a link for the actual rule posted in the federal register. For an explainer that will probably make more sense, here are two documents from the Labor Department, which argued for the rule under President Obama:

• “Department of Labor finalizes rule to address conflicts of interest in retirement advice, saving middle-class families billions of dollars every year.” Here’s the link: www.dol.gov/ProtectYourSavings/FactSheet.htm.

• “FAQs: Conflicts of Interest Rulemaking” can be found at www.dol.gov/featured/protectyoursavings/faqs. The page offers 22 questions, including an explanation of conflict of interest and what the new rule covers. Be sure to read: “How can I know if my adviser is acting in my best interest?”

Next go to Investopedia.com, which has a good history and summary of the arguments for and against the rule. On the homepage, click the link for “DOL Fiduciary Rule Explained as of Feb 3, 2017.”

Many financial industry groups and companies who oppose the rule argue that small investors will be hurt. They contend it could make it more expensive for them to provide advice to investors.

But a federal judge recently smacked down a challenge to the rule brought jointly by the U.S. Chamber of Commerce, the Indexed Annuity Leadership Council and the American Council of Life Insurers.

Here’s how Chief Judge Barbara Lynn for the U.S. District Court for the Northern District of Texas summed up part of the case: “Plaintiffs complain that financial professionals are improperly being treated as fiduciaries and should not be required to comply with heightened fiduciary standards for one-time transactions.”

Lynn rejected that argument and objections to the fiduciary rule, writing in her opinion, “The DOL reasonably found that institutions and advisers that are paid on a commission basis may very well make investment recommendations that benefit themselves, at the expense of plan participants and beneficiaries. Advisers who are paid in asset-based fee arrangements are not faced with such a conflict of interest.”

The order continues: “Because small differences in investment performance will accumulate over time, those differences can have a profound impact on an investor’s retirement income; as the DOL noted, an ‘investor who rolls her retirement savings into an IRA could lose 6 to 12 and possibly as much as 23 percent of the value of her savings over 30 years of retirement by accepting advice from a conflicted financial adviser.’ ”

I don’t expect you to wade through Lynn’s full 81-page ruling (it’s very legally dense). But in case you do want to read it, you can find it at www.txnd.uscourts.gov/.

So who’s right in this fight?

Once you understand the rule, you can decide if someone you hire for advice should be required to act in your best interest.

I’ll be hosting an online discussion about the rule and any developments on Feb. 23 at washingtonpost.com/discussions.

Michelle Singletary can be contacted at:

michelle.singletary@washpost.com

Twitter: SingletaryM

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