It only went into effect on June 9th, but the Department of Labor’s fiduciary rule, also known as the conflict of interest rule, is already changing the way things are done in investment firms across the country.

The rule’s purpose is a noble one. It’s designed to protect consumers who are planning for retirement from being taken advantage of by financial advisers. Under the conflict of interest rule, advisers must put their clients’ best interests first rather than suggesting investments that yield the largest commissions.

In theory, this rule protects consumers in the long run. In the short run, it’s causing confusion for both consumers and advisers alike. Consumers now want to know: how does this change my portfolio going forward? And if my advisers aren’t going to make recommendations based on commissions, how will they make decisions about where to invest my money?

Enter T shares. They meet the new standard set by the conflict of interest rule. Instead of netting fluctuating commissions for financial advisers, T shares are subject to a flat fee of 2.5% and a .25% 12-b(1) investment fee. Larger purchases may have lower loads.

Transparency is one of the biggest attractions of buying T shares. Even people with limited understanding of investments can feel confident putting their money into T shares. The terms of this type of fund are fairly straightforward: pay 2.5% upfront and an ongoing fee of .25%, and in exchange, enjoy the peace of mind that comes with knowing your adviser isn’t trying to push you into a fund in the interest of earning a hefty commission.

While the conflict of interest rule and other DOL rules are subject to change, consumers and financial advisers can embrace T shares knowing that these funds meet the current standards for ethical investing.

Authored by: Paul Ford