The new fiduciary rule announced Wednesday by the Department of Labor is a major coup for investors, said Jon Stein, founder and CEO of the robo-advisor Betterment.
"We support this rule for a lot of reasons. We've actually been engaged and involved with the Department of Labor and the OMB for awhile supporting this rule," Stein told CNBC's "Closing Bell" on Wednesday. "It's an unambiguous public good. This is one of the most exciting things to happen for investors in 40 years."
By holding investment professionals to what is called a "fiduciary standard," the rule is intended to change the way people get advice on how to invest that money.
The Labor Department, which regulates tax-advantaged savings accounts, is bringing more investment advisors under an already existing rule known as the "fiduciary standard," which requires financial advisors to put their clients' best interests ahead of their own profits.
As of now, only financial professionals and firms registered as investment advisors with the Securities and Exchange Commission or individual states follow that rule. Brokers, insurance agents and most other financial professionals are held to a "suitability standard" which gives them significant wiggle room. That means they only need to make investment recommendations that are suitable for their clients, but not necessarily the best option.
While the new rule appears "sound" in theory, its implementation may not necessarily benefit investors, said Gregory Sichenzia, a securities lawyer with Sichenzia Ross Friedman Ference.
"Overall, there's going to be a huge regulatory cost to this which we believe is going to be passed on ultimately to the consumer," said Sichenzia in the same "Closing Bell" segment.
Still, Stein said that having consumers' interests aligned with their investment advisors' will reduce costs over time and even help restore confidence in the financial system.
"If you can trust anyone who holds themself to be an advisor, if you can trust them to be acting in your best interest, that's great for everyone seeking financial advice."
— CNBC's Sharon Epperson contributed to this report.