After years of anticipation, the Labor Department will release its fiduciary rule on Wednesday, sources confirmed Friday.

Labor Secretary Thomas Perez and other political luminaries are set to announce the regulation that many believe could usher in unprecedented change in the financial services industry.

U.S. Secretary of Labor Thomas Perez
Bloomberg/file photo

Conflicted advice

The rule would require advisers, planners and wealth managers to place their clients' financial interests ahead of their own when advising on retirement accounts. By implementing it, the Obama administration aims to reduce the $17 billion that the White House Council of Economic Advisors estimates Americans lose annually to conflicted financial advice on their retirement accounts.

The move has been hotly contested by many in the industry who say it will cut back on their ability in particular to serve investors with smaller accounts. They also say that, given its complexity, implementing the rule will prove unwieldy. Proponents have countered that few Wall Street firms are interested in clients with relatively small investment portfolios and that opposition is based on fears about lower fees as well as fighting a proposal from the Obama administration.

Industry opponents of the rule have sought avenues to stop it in Congress. But the administration retains the power of a presidential veto to impose its will, says Ron Rhoades, head of the financial planning department at Western Kentucky University.

Lawsuits threatened

Numerous organizations, including the U.S. Chamber of Commerce, also have threatened to immediately file lawsuits on the heels of the rule's release, says Mercer Bullard, founder of Fund Democracy, an advocacy group for mutual fund shareholders.

However, more recently, even FINRA CEO Richard Ketchum told Financial Planning that a uniform fiduciary standard makes sense.

Of note is the fact that, in the weeks leading up to the rule's release, there have seen a flurry of the changes from big wealth management companies that many advocates say investors have needed for years.

They include independent broker-dealer Ladenburg Thalmann's decision to offer a self-service advice platform with a minimum account balance of $500 and leading independent broker-dealer LPL Financial's move to slash prices on many of its model portfolios.

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