Registered investment advisers may not be the primary target of the Department of Labor's controversial fiduciary regulation, but the new rules can be expected to have a broader impact on the industry than many firms anticipate, advisers and compliance experts caution.

“I believe the change will be greater than expected for RIAs,” says Ryan Borer, founding partner and chief executive of Fusion Capital Management, a Coppell, Texas-based advisory firm.

In the face of vigorous opposition from many business groups, the DoL moved ahead with the rule to put checks on conflicted advice in the retirement space, requiring advisers, brokers and other professionals who work with retirement plans and individual investors to act as fiduciaries.

But RIAs are already held to a fiduciary standard by their primary regulator, the Securities and Exchange Commission. So what changes?

It is true that brokers and other segments of the financial services industry might bear the brunt of the new rules, but the DoL's extension of fiduciary responsibilities under the Employee Retirement Income Security Act will reach independent advisers, as well, bringing a different regulator with a more rigorous definition of “fiduciary,” as well as exposure to potential legal liabilities.

“A common misunderstanding from the RIA community is that the rule will have little or no impact on their business given their fiduciary legacy,” says Sam Ushio, director of practice management at Russell Investments.

“The RIA community will likely face less disruption than other channels,” he says. “However, changes to behavior ... will still be required to adapt to the landscape of a heightened fiduciary definition.”

So activities such as helping clients roll over a retirement account or a recommendation to take a distribution from a plan could trigger the fiduciary requirements under the rule, which would make advisers subject to the DoL’s established standards of expert care and loyalty.

Additionally, certain activities are deemed prohibited under the rule, such as providing recommendations that would net the adviser elevated compensation. That could be in the form of commissions or transaction fees, or, for so-called level-fee advisers, bringing a greater share of a client's assets under management through a rollover.

At the center of the DoL's rule is a provision under which advisers can continue to engage in those otherwise prohibited transactions -- what the DoL calls the best-interest contract exemption. The subject of heated debate in the long run-up to the publication of the final rule, the BIC exemption requires advisers to enter into a contractual agreement with their clients, averring their fiduciary status and documenting the rationale behind the investment recommendations, among other obligations.

Many observers anticipate that that provision will become a default industry standard.

“If you provide rollover advice, you will need some form of BIC exemption,” says Marilyn Mohrman-Gillis, managing director of policy and communications at the CFP Board of Standards.

The BIC exemption also provides for a private right of action, meaning that an aggrieved client could sue the adviser for an alleged violation of the best-interest contract.

To be sure, the DoL's rule isn’t expected to completely turn the RIA world on its head, and certain firms would be relatively insulated from its impact.

However, experts suggest that the rule will require close scrutiny from the compliance team to determine how to meet any additional regulatory requirements, and potentially could prompt firms to reorient their practice.

“In reality, it is going to have a large impact on cost to the RIA model and specifically in terms of compliance and technology,” Borer says. “Ultimately, I believe this is going to force advisory firms to become more selective with the type of accounts [or] clients they are bringing onboard, due to the increased liability associated with that account.”

This story is part of a 30-30 series on tools and strategies for retirement.