(Bloomberg Gadfly) -- It’s early days for the Department of Labor’s fiduciary rule, but itscritics are already wagging their fingers and saying “we told youso.”

The main thrust of the rule -- the requirement that brokers puttheir clients’ interests ahead of their own when handlingretirement accounts -- took effect on June 9.

Money managers must comply with the rule’s remainingrequirements by Jan. 1, 2018, although the Labor Department sought last week to extendthat compliance deadline to July 1, 2019, presumably to considerrevisions to the rule.

There’s no going back, however. The rule has exposed anintolerable conflict of interest: Brokers are paid by the mutual funds theyrecommend to clients.

For many investors, that neatly explains why they’ve been soldhigh-priced actively managed funds that routinely fail to keep upwith the market. And those investors have had enough, as evidencedby the huge flows to passive and low-cost funds in recentyears.

Wall Street has received the message, and it isn’t waitingaround for the Labor Department. Brokers are paring high-pricedfunds from their mutual fund offerings to retirement savers.

They’re also moving those investors from commission-basedaccounts -- which charge a fee for each transaction -- to fee-basedaccounts -- which charge an annual fee based onassets.

Critics point to those changes as proof that retirement saversare paying more and have fewer investment options. RonaldKruszewski, chief executive of Stifel Financial Corp., told theWall Street Journal last week that assets are growing in Stifel’sfee-based accounts “primarily because of DOL,” and that suchaccounts can be twice as costly for clients.

Investors may be paying more at Stifel, but there’s a goodchance they’re paying less elsewhere. It’s true that money managerscharge more for fee-based accounts than commission-based ones.

But most fee-based accounts are held to a fiduciary standard,which means that the mutual funds and ETFs in those accounts mustbe reasonably priced.

In other words, what investors pay in higher account fees ismore than likely offset by lower fund fees.

It’s not even clear how much more retirement savers willultimately pay for fee-based accounts. There’s growing pressure onboth funds and money managers to reduce those fees. According tothe Journal, Merrill Lynch has already given its “more than 14,000brokers more flexibility to cut fees” for clients who move tofee-based accounts. I suspect other firms will follow.

It’s also worth noting that many brokers are preservingcommission-based accounts as an option. Morgan Stanley is loweringits commissions and rolling out a robo-adviser. Merrill Lynch isalready offering discounted brokerage and low-cost automatedinvesting. And don’t forget about all the other discount brokersand robo-advisers already available to investors.

The argument that retirement savers have fewer investmentoptions is also a red herring. Consider that, according toMorningstar data, there are 122 actively managed U.S. large-capblend A-share mutual funds with 10-year track records. Theiraverage expense ratio is 1.11 percent annually, and that doesn’tinclude sales charges, or loads, to buy and sell the funds. That’sat least 20 times more expensive than an S&P 500 indexfund.

Consider, also, that just six of those 122 funds beat theS&P 500 over the last 10 years through July, net of all feesand expenses. Are retirement savers worse off if fewer of thosefunds are available to them? I don’t think so.

I’m not suggesting that the rule shouldn’t be open to debate.Many brokers support a fiduciary standard, for example, but worrythat the rule’s compliance provisions are unnecessarily burdensome.Robert Seawright, chief investment and information officer atMadison Avenue Securities, a dually registered broker and fiduciaryadviser, is one of them. He says that the rule is “costly anddifficult to implement, particularly for smaller firms without lotsof resources. The rule as currently in effect, which requiresreasonable fees and prohibits misleading information, largely getsthe job done without a lot of unnecessary bureaucracy.”

On the other hand, Barbara Roper, director of investorprotection at the Consumer Federation of America, pointed out byphone that “compliance with the fiduciary rule is hard because theconflicts are so pervasive and reining them in is a big job, notbecause the rule itself is so complex.”

By all means, let’s have a robust discussion about how toimprove outcomes for investors, but let’s stop inventing bogusreasons why we shouldn’t look after their best interests.

Related: See our DOL Fiduciary page

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