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The long-awaited “fiduciary rule,” now starting to take effect, is designed to protect retirement savers by holding investment advisers to a tougher standard.

Simply put, it means advisers have to look out for your wallet more than their own pockets.

What is a fiduciary standard?

The fiduciary standard requires advisers to put their clients’ best interest ahead of their own. Faced with identical products but with different fees, advisers under the fiduciary standard would be compelled to recommend the ones with the least cost to clients, even if it means fewer dollars for the advisers and their firms.

The fiduciary rule takes a hard line on industry practices such as back-door payments and hidden fees. Brokers and advisers must now make recommendations in the best interests of the investor who is saving for retirement.

The U.S. Department of Labor scheduled the basic framework of the rule to take effect June 9. Full implementation is expected by Jan. 1, 2018.

Here are four questions to ask so you can feel confident your retirement adviser is abiding by the new standard.

No. 1: How do you make money?

“You don’t want your financial planning to be influenced by a product sale,” says Ethan Braid, founder of HighPass Asset Management in Denver.

Investors need to be aware that many planners will suggest solutions that include, say, an insurance product. While life insurance or an annuity may, in fact, suit your needs, the fees may be more than you want to pay.

A 7 percent upfront fee on a $100,000 variable annuity means a commission to the broker of $7,000.

No. 2: What changes have you made to obey the rule?

Some advisers might answer that they used to work for commissions but are moving to fee-based compensation.

“I think a lot will say, truthfully, they’ve always been fiduciaries, and the rule does not change much about their business aside from some additional paperwork,” says Roger Wohlner, a fee-only financial adviser in Arlington Heights, Illinois.

But in the brokerage world, many may look at the fiduciary rule as a chance to raise fees on smaller clients, he adds.

No. 3: How is this product or financial strategy in my best interests?

A concise, ready description of how the adviser works is vital, and any hemming or hawing is a red flag, Braid says. Watch out for defensive behavior, crossed arms or phrases such as “You just have to trust me.”

“It’s going to be an interesting question for a broker who is always putting people in high-cost variable annuities,” says Wohlner.

A variable or a fixed annuity (ideally low-cost and without huge surrender charges) is fine as long as it fits the person’s goals and specific characteristics.

No. 4: How do these products compare with others?

Ask specific questions about product charges and fees, and if products exist with lower fees.

“If they’re answering honestly they may disclose that,” Wohlner says.

“People have to become knowledgeable about these issues,” he says. It’s their money. A good client is someone who comes in with a bit of knowledge and has read up on things. It makes for a more engaging relationship.”

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