Small business wonders: Will the fiduciary regulation be dead on arrival?

One of the investment industry’s most dreaded regulatory actions set to take effect in April might be dead on arrival.

This regulatory action is the Department of Labor’s fiduciary rule. Since its introduction last year, the rule has been seen as creating more problems than it solved.

During his campaign, now President Donald Trump vowed to do away with regulations deemed to be detrimental, including those aimed at small business owners. Observers have repeatedly pointed to the fiduciary rule as one that would probably put 20 percent of retirement investment advisers out of business.

But, the fiduciary rule sounds pretty reasonable. It requires financial advisers to act in the best interest of their clients when they advise them about their 401(k)s and individual retirement accounts.

The rule was intended to hold investment advisers more accountable for the advice they give. Concerns are that too many of these advisers steer people saving for retirement into investments that may not be best for them, but generate a lot of fees for the advisor.

The rule was meant to keep advisers from charging investors excessive fees, but many oppose it because they believe it will do just that and more.

The U.S. Small Business Administration counters with the following arguments:
* Small business owners could see a decrease in their investment service options.
* Access to investment education would be limited to only those who are deemed fiduciaries, the new standard for investment advisers.
* The rule phases out commissions, which small businesses favor. That’s because their budgets are typically not large enough to handle, nor justify, the notoriously high flat fees charged by advisers.

If the rule is passed, it will spawn a whole new area for government reviews. The quandary will continue unless Trump moves to delay the April 10 effective date of the measure, or quash it all together. As of the time of this writing, no changes had been formally announced by the Trump administration.