The Department of Labor (DOL) announced on Tuesday the final Retirement Security Rule, or fiduciary rule, which changes financial advisors’ fiduciary responsibility when dealing with retirement-related investments for plan sponsors and individuals.

The rule, which goes into effect on September 23, updates the definition of an investment advice fiduciary under the Employee Retirement Income Security Act (ERISA) of 1974.

The final rule requires “trusted investment advice providers” and financial institutions that engage with them to ensure that clients do not face conflicts of interest or overcharges for their services.

“This rule protects the retirement investors from improper investment recommendations and harmful conflicts of interest,” acting Secretary of Labor Julie Su said. “Retirement investors can now trust that their investment advice provider is working in their best interest and helping to make unbiased decisions.”

The initial proposal, which was presented in October 2023, has received criticism from the financial industry and Congress, as well as legal threats and over 20,000 public comments and petitions. While the rule is basically the same as the original proposal, officials claimed they made minor revisions in response to feedback.

The DOL’s last attempt to enforce a fiduciary rule, during the Obama administration, was ultimately overturned by the U.S. 5th Circuit Court of Appeals. Opponents of this version of the rule have threatened similar legal action.

The American Securities Association issued a statement calling the rule “just as bad as the original,” stating it would consult with members to determine next actions.

In response to the final rule, the Securities Industry and Financial Markets Association (SIFMA) stated that, “As proposed, the rule conflicted with existing federal securities regulation – specifically Regulation Best Interest – and would likely limit investors’ access to advice and education. Stakeholders have been quite explicit on the need to address these conflicts and we will be reviewing the conflict-related text as well as other relevant text on the material flaws we raised in our comments.”

Investment Company Institute (ICI) president and CEO, Eric Pan, said, “ICI is reviewing the DOL’s final rule, bearing in mind the concerns we raised with the agency that it may raise costs and interfere with middle-class savers’ access to the guidance, products, and innovative tools they rely on to meet their retirement goals.”

Meanwhile, DPL Financial Partners, a platform for commission-free annuities, praised the final rule. “The rule adds a critical layer of definition and transparency, which will provide retirement investors with assurance they are receiving advice in their best interest and an understanding of how the person making a retirement investment recommendation is being compensated,” said CEO David Lau.