For advisors, the big day is finally here.

After seven years of debate, the Department of Labor fiduciary rule went into effect at midnight Friday. Broker-dealers and dual-registered advisors now have to put the best interests of their clients first when handling retirement accounts.

The change marks a massive shift for advisors and for the industry, according to financial industry insiders. The DOL is allowing a transition period until January 1, when it will begin actively enforcing the rule. The rule states that advisors must act in the best interest of clients and not just provide products that are suitable; charge no more than reasonable compensation; and make no misleading statements. Exemptions for some accounts are available if the client is properly informed.

However, the rule isn't exactly set in stone—at least not yet. During the transition period, Congress, the SEC and the DOL are continuing to review the rule, which is opposed by Republicans in Congress.

“This is a major victory in the decades-long fight to ensure that investors get the best interest advice they want and deserve when they turn to financial professionals for help with their retirement, says Barbara Roper, director of investor protection for the Consumer Federation of America. “But this victory is far from secure. For investors to truly be protected, we need to ensure that neither Congress nor the Trump administration undermines these protections by rescinding or watering down the rule.”

Ryan Parker, CEO of Edelman Financial Services, says advisors have work to do to make sure they comply, even if they are already RIAs.

“Advisors need to use the implementation of the fiduciary standard as an opportunity to talk with clients about the value they are providing,” says Parker. “For advisors who are not fiduciaries now, it may be an awkward conversation.”

The new standard requires retirement plan advisors to act in the best interests of clients rather than just recommend suitable products. This may force some firms or advisors that do not want to do the extra work to demonstrate they are fiduciaries out of business, so the industry will see more compression, he says.

Jill Jacques, global financial services lead at North Highland, a global consulting firm based in Atlanta, says, “A lot of clients are confused [after getting] a letter in the spring from their advisors saying their service model was changing. What advisors need to do now is look at the conversations they will have with clients from the clients’ point of view. Advisors who are part of a large firm should reach out to the firm to see how they should approach clients.”

One area that will now come under additional scrutiny is rollovers of retirement savings, she adds, and advisors should be prepared for that. They will have to document that the rollover was in the client’s best interest.

“We are telling advisors to embrace the fiduciary rule, accept it and understand it because it is the way the industry is going,” Jacques says.

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