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What Trump's fight over retirement savings rules means for your nest egg

The Trump administration is working against an April 10 deadline to delay and alter a controversial Obama-era rule crafted to prevent conflicts of interests when brokers give you retirement advice.

The Department of Labor has reportedly requested a 180-day delay and wants to have another round of public comments after President Donald Trump ordered the department to review the regulation on Feb. 3.

So what does this mean for retirement savers? Opponents of the rule, which only affects retirement accounts like IRAs and 401(k) plan rollovers, say it could limit access to financial advice for ordinary investors. Meanwhile, consumer advocates maintain that the regulation puts clients' interests ahead of their advisors, which can save you money.

Many financial firms say they will comply with a fiduciary standard no matter what happens to the regulation.

"Though there is a lot of uncertainty now, our firm is committed to fiduciary best practices," said Shelby George, senior vice president of advisor services at Manning & Napier in Fairport, New York.

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She said she expects more financial advisors to offer fee-based advice, provide additional transparency about the fees that they charge clients, and conduct a more rigorous process around the investments they select for clients. For example, LPL Financial, Merrill Lynch and Morgan Stanley are moving ahead with changes they made to comply with regulation.

The rule just accelerated trends that were already happening in the asset management and financial advice businesses, said Brian Reid, chief economist for the Investment Company Institute, which represents the mutual fund industry. The ICI has opposed the regulation because it could make guidance more expensive for investors with small account balances.

Even without the rule, more brokers are being compensated by fees rather than commissions (see chart below) and more than 80 percent of money going into mutual funds doesn't come with sales charges or marketing fees, Reid said.

Yet the rule has already limited choices for investors, said Ken Bentsen, president and CEO of the Securities Industry and Financial Markets Association, which represents financial services companies.

Some firms no longer offer any IRA brokerage accounts and others are discontinuing those accounts altogether.

"People who make few transactions a year, don't want to pay an annual advisory fee and just want to pay a transactional fee are losing that choice," Bentsen said.

That choice may come at a high cost. Investors who receive so-called conflicted advice lost 1 percent in returns, or $17 billion, each year, according to a 2015 report from the Obama administration.

"There is no such thing as free advice and people are paying for sub-optimal advice," said Cristina Martin Firvida, director of financial security at the AARP, which supports the regulation. "You have to look at the cost of not having this rule and wonder if it's worth it."

You don't need a fiduciary rule to protect your nest egg. First, ask your advisor how they compensated. Then, request they sign a fiduciary oath, which legally requires them to avoid conflicts of interest, according to industry experts.