Donald Trump. AP It's a simple enough concept. A financial adviser should be legally required to put their clients' best interests ahead of their own.

But it's actually not the law. The Department of Labor — which concerns itself with such matters because of its oversight of workers' welfare and retirement — has decided to change that.

In April, a change called the "fiduciary rule" is set to take effect. Its specific requirement is that financial advisers — who can be paid referral fees by asset managers for directing client money into their funds — must put their clients' interests ahead of theirs.

With President-elect Donald Trump's win and promises of government deregulation, the future of the rule — and Americans' retirement money — is at stake.

What is the fiduciary rule?

Currently, brokers, financial advisers, and other finance professionals don't legally have to act in a client's best interest, with few exceptions, such as those who are registered as investment advisers with the Securities and Exchange Commission or in individual states. Those who are registered in this way often advertise it — it's seen as good business.

Those who aren't registered, like brokers, just have to prove that the investment is suitable, not necessarily the best option, for their client — no matter that that fund might be more expensive and provide a better commission for the adviser.

"It's kind of like if you let doctors be part of the drug companies directly and prescribe their own medicine," said Blaine Aikin, executive chairman of fi360, a fiduciary consultancy in Pittsburgh. "Unfortunately, we have a system where we've not established clarity between the sales side of financial services and the profession of financial advice."

A summary of the kinds of conflicted payments advisers can receive. White House report The conflicts of interest inherent in using advisers who aren't serving in clients' best interests may go unnoticed by those who use them, unaware that they are signing into a conflicted relationship.

"One problem is that individuals may not be able to evaluate the quality of the advice they are given by advisers, making it difficult for them to differentiate a good adviser from a bad one," Julie Agnew, a professor at the Mason School of Business of the College of William and Mary, said in an email.

The Obama administration in a 2015 report found that conflicted advice cost savers about $17 billion a year. Despite objections, the administration pushed ahead with a rule change in April, giving fund managers a year to figure out how they would comply.

Advisers can still receive commissions under the new rule, but they have to provide a contract promising to put a client's interests first — the "best-interest contract exemption" — and receive no more than reasonable compensation. Firms will also have to clearly disclose all their compensation and incentive arrangements.

Wall Street firms are worried about this exemption because it opens them up to litigation if their clients believe their advisers have not acted in their best interest. "Retirement investors will have a way to hold them accountable," the Labor Department says.

To be clear, this rule applies only to retirement accounts like 401(k)s and individual retirement accounts, not to regular taxable accounts, with which advisers can rely on the weaker suitability standard.

When it was first raised, the rule prompted rebuttals from the financial industry. Some argued that they would face increased compliance costs and that those costs would price out smaller brokers who wouldn't be able to service smaller accounts.

Wall Street firms are also fearful of another secondary effect that would hit them where they are already hurting. The rule is expected to accelerate a shift toward passively managed funds, like exchange-traded funds, because it's easier to prove that such a product, which is cheaper, is in a retirement saver's best interest. That has already been a big issue for Wall Street, as index funds have eaten into the share of actively managed funds.

There's big money at stake here. Americans invest $7.8 trillion in IRAs and $7 trillion in 401(k)s, according to the industry's lobby group, ICI.

The Trump conundrum

Now with Trump, who has railed against government regulation of Wall Street, set to become president, expectations that the fiduciary rule won't survive have increased.

One of Trump's advisers, Anthony Scaramucci, is an outspoken critic of the rule, saying it would hurt investors because it would supposedly make it harder for people to get retirement advice; he argues, among other things, that advisers wouldn't be able to afford to service low-balance accounts. Some expect Trump will roll back the rule, and others have documented potential ways he could.

Anthony Scaramucci. Hollis Johnson

The Wall Streeters opposing the rule have a lot at stake. Scaramucci, for example, is the founder of SkyBridge Capital, a fund of hedge funds — basically a firm that invests in other hedge funds. Last month, he told Bloomberg Television that he has hired advisors to explore the sale of the firm in case he takes up a position in the Trump administration.

He has likened the fiduciary rule to the Dred Scott case, the 1857 Supreme Court decision that denied US citizenship to black people, later explaining that he meant it was a sign of "bad governmental decisions." He has also said that Trump would repeal the rule.

SkyBridge's investors are often well-off dentists, doctors, and the like, who aren't rich enough to invest directly in hedge funds but can access them via SkyBridge with as little as $50,000 — much lower than what private hedge funds normally require. Those investors often invest via private wealth platforms at the banks, and through retirement accounts.

SkyBridge pays banks like Morgan Stanley and Citigroup to sell its funds, according to filings. It's not alone. Blackstone, the alternatives giant with $361 billion in assets, also rewards banks that direct client money toward it, according to filings. Industry experts say that many other firms do the same.

Blackstone, for one, acknowledges the inherent conflicts that arise with this kind of setup. One of its regulatory filings says "these payments may create incentives on the part of a selling agent to view the fund favorably compared with investment funds that do not make these payments."

The fiduciary rule could put this very model of using a bank's army of financial advisers as a sales force for hedge funds at risk, especially at fund-of-funds that often end up in retirement accounts.

"The vehicles that are set up to court high-net-worth individuals often have the IRA money," said Josh Lichtenstein, an attorney at Ropes & Gray, alluding to retirement accounts.

The fiduciary rule doesn't ban distribution fees outright, but it could make it harder for banks to accept them from hedge fund managers when they are dealing with clients' retirement money, according to Wall Street lawyers interviewed by Business Insider.

"While the [Labor Department] hasn't banned these kinds of payments, they've made it incredibly difficult to meet the conditions to allow them to proceed," said John Ryan, an attorney at Seward & Kissel.

The structure would be costly to change, not to mention it's a "lucrative" and "well-entrenched system," said Aikin, the fiduciary consultant.

It might be too late

For all the concerns about what Trump could do to the rule, it might actually be too late for him to do much to undercut the change. That's because Wall Street firms have already made the move to comply with the new standard, creating an industry shift unlikely to bend even in a worst-case scenario, experts say.

"Pragmatically, it's very difficult to step back from a rule that's so obviously needed," said Jack Bogle, founder of the index provider Vanguard Group, which is known for its low-cost offerings and is likely to benefit from the change.

Wall Street firms like Credit Suisse are predicting that the odds that the rule will be overturned under Trump have only slightly increased. The more likely scenario is that the rule's implementation will be delayed, experts say.

"President Trump cannot, by waving a magic wand or by sprinkling pixie dust, just revoke that particular regulation, even if he wanted to," Marcia Wagner, a retirement lawyer, told MarketWatch in a recent video interview.

The Frances Perkins Building, headquarters of the Labor Department. Wikimedia Commons

And some DC lobbyists who backed the rule are also optimistic. One, who asked to remain anonymous so as not to expose their organization's positioning, said they had "no reason to believe this is a high legislative concern [for Trump], as opposed to tax, healthcare, and infrastructure."

The Labor Department has been pushing for the rule for several years, creating a battle between Wall Street and Main Street lobbyists. In 2011, the department withdrew a 2010 proposal after Wall Streeters made similar arguments against it. Meanwhile, groups like the AFL-CIO and AARP have called the rule a necessity to protect savers. AARP, which represents retirees, has said it plans to continue fighting for the rule.

White House report

Perhaps unsurprisingly, some financial firms that would benefit from the shift are backing the rule.

Betterment, an automated investing firm, recently took out full-page ads in The Wall Street Journal and The New York Times imploring Trump to keep his hands off. That garnered the support of Democratic Sen. Elizabeth Warren, also a backer of the rule.

Other advocates say many retirement advisers already have chosen to act in their clients' best interests, opting to work under the fiduciary standard.

"Registered investment advisers and fiduciary retirement advisers [in the US] exist today and do very well in the marketplace," Aikin said. "We know it's possible."

'It's pretty clear who they are going to pick'

Other countries have been through this switch before. Countries like the United Kingdom and Australia in recent years implemented their own versions of the fiduciary rule.

Bank of America Merrill Lynch said in ads that it planned to abide by the fiduciary standard. Merill Lynch

At the same time, several financial firms, including Merrill Lynch, have said they would switch over, and are expected to continue to do so. Merrill Lynch even launched an ad campaign earlier this year extolling its commitment "to a higher standard for retirement accounts."

That's why many people think the industry is already heading toward a fiduciary standard.

"Despite what the new administration may do, a lot of the financial services industry is already in motion to operate under the rule," said Aikin. "I'm not sure they are going to turn back. ... There's competitive and reputational advantage, and ultimately, a business advantage" to being a fiduciary.

"If you describe to the average investor what 'fiduciary' means and you say to them, 'Would you rather have someone who is obligated to serve your best interests, or someone who is not obligated?' It's pretty clear who they are going to pick."

Or as Bogle said of Wall Streeters' aversion to change, "If it's better for Main Street, it's worse for Wall Street."