Under this new rule, any financial professional who works with qualified plans, like IRAs or 401(k)s, will be required to act as a fiduciary. To act as a fiduciary, an advisor needs to act in the best interests of their client and to put their client’s interest above their own. This rule also requires all fiduciaries to disclose all fees to the client, even though they may be hidden in the investment prospectus.

Fees pertaining to A shares, C shares, expense ratios, commissions and advisory services need to be fully disclosed. As a result, all the concerned entities are scrambling to comply by the April deadline.

Mutual funds are under tight scrutiny under this new ruling because of the fee structure. The rule discourages advisors from selling commission-based products like mutual funds to their clients’ retirement accounts, when a lower-cost exchange-traded fund might be available. In the eyes of the DOL, many actively managed mutual funds do not justify the higher fees and are similar to the long-term results of a lower-cost index fund.

For mutual fund companies, this puts immense pressure on reducing expense ratios to compete with other lower-cost financial products. Many retirement plans are currently reevaluating the funds they provide to their participants to ensure that they are the best available options. In fact, some of them have decided to add ETFs to offer lower-cost options to their participants. For instance, Schwab now offers 401(k)s with a choice of either mutual funds or its Schwab Index Advantage ETFs. Make sure to find out the questions that you need to ask when purchasing mutual funds before making your decision.

For the average investor, the new fiduciary rule has both benefits and disadvantages. The biggest advantage is that now investment professionals and product providers must be completely transparent about their fees and present relevant options to their clients. For example, many investment professionals encourage their clients to roll over their past employer’s retirement plan funds into an IRA.

This will now be under great scrutiny, as professionals must disclose that a client has the right to stay in the plan, which will most likely have much lower internal costs or fees. If there is no value in lieu of fees, the professional is not acting in the best interest of the client. Therefore, mutual fund investors will be better educated on how investment fees are charged and measure the differences between any existing or new funds and their lower-cost alternatives.

The negative aspect of the rule is that now investors will have limited access to investment options and advice. Already, several brokerage firms are adjusting their retirement business for only higher account valued clients because lower accounts are not worth the risk of non-compliance of the rule.

Moreover, clients that decide to stay in a retirement plan can experience lower fees, but will not receive any ongoing advice, which can potentially cause more harm. With retirement plans also looking to comply with the rule, the investment options will be limited within the plan in an effort to minimize fees. Check the various costs attached to mutual funds before you start to invest.

Clients that want to remain in a commission-based account will be required to sign a Best Interest Contract Exemption (BICE) form before the proposed April 10, 2017 deadline. However, they might run out of luck if the brokerage firm decides not to provide any commission-based retirement accounts after the April deadline.

Moreover, brokerage firms and investment advisors are also increasing the account size of clients with retirement accounts, so clients with smaller accounts might be transitioned to other advisors.

Investors with qualified plans like an IRA or 401(k) will certainly be affected but it all depends on the brokerage or investment firm they are working with.