When I started RELiANCE Investing, Inc. more than ten years ago, I was fresh out of Graduate School. I had an MBA, and I wanted to change the world—to make it a better place as best I could while looking at the world through the financial services kaleidoscope. I was bright-eyed and bushy-tailed as many newly-minted business school grads tend to be. I remember feeling the same way about ten years hence with my “Hot Off the Press” Bachelor’s Degree that I couldn’t wait to put to good use. Though I was filled with all the pent-up energy of a young soldier’s first pass after basic training, the world slapped me in the face with a wet towel. I wanted to improve financial literacy and reduce fees in group retirement programs—which often happened simultaneously in the group retirement business—but when you start dealing with governmental references, legal interpretations, and all the nuances imposed by those who are literally NOT in the business helping everyday investors make good decisions, it was a brutal fight that nearly broke our business.

Politicians and pundits have been at odds about the term “fiduciary” since we formed RELiANCE Investing back then, but I always felt the distinction was clear. I fell on my sword when it came to educating the investment public about the difference between Advisors and Advisers. Notice the “O” at the end of advisor, and the “E” at the end of adviser. The AP Stylebook suggests that “advisor” should reference the firm. In our case, RELiANCE Investing would be the Advisor or Registered Investment Advisor (RIA). “Adviser” then would refer to the individual, in such a way that I would be referred to as an Investment Adviser. In my mind, this is a huge distinction from a Financial Advisor, which as far as I can tell is like the patsy in a poker game—unfortunately those patsies have many followers: countless individual investors.  And this was the main thing I had hoped to distinguish during my 15 minutes out of Business School.

Ten years later, the Department of Labor (DoL)—the governmental agency which which oversees your important 401K and pension assets—with full support of the Obama administration, failed to impress lawmakers of the advantages of applying a fiduciary rule to all financial professionals or investors. That never really surprised me; I prefer to let the invisible hand guide the market, but some processes are so embedded that, even though they may be broken and there’s a better way to do it, it takes generations before there is change for the betterment of investors. Investors may just have to learn the hard way still.

It may surprise you to learn that clients’ relationships with their financial professionals are governed by multiple standards. One, the suitability standard, governs brokers (often called Financial Advisors—note the “o”—or Financial Consultants). These folks sell financial products for a commission, usually being paid at the point of sale. The suitability standard states products these salespeople pitch must not run counter to clients’ goals, objectives, or needs. The other, the fiduciary standard, applies under the Investment Advisers Act of 1940 (the Advisers Act). It governs Registered Investment Advisers—firms that sell ongoing advice for a fee. The fiduciary rule is the government’s higher standard of care. It includes suitability but adds that, in making recommendations, advisers must put their clients’ interests before their own. In addition, this rule requires advisers disclose any known conflicts of interest they face in presenting a recommendation. And if there is a conflict of interest, then how can they be acting in the investor’s best interest? It’s a tough test, one that Financial Advisors and the Brokers they represent hope to pass by adding pages and pages of disclaimers. And the government complies.

During the past decade, the government claimed the lower suitability standard leads Financial Advisors to advise in favor of commissions for themselves rather than similar and potentially cheaper alternatives (seems logical). This issue gained notoriety during the debate over the Dodd-Frank Wall Street Reform and Consumer Protection Act. Dodd-Frank authorized the Securities and Exchange Commission (SEC)—RIA’s regulatory body—to expand the fiduciary duty to all financial professionals if it saw fit. The SEC launched a study. Meanwhile, the DoL unveiled its own rule targeted at protecting retirement investors. In arguing for its rule, DoL cited a study by the White House Council of Economic Advisers claiming that the flawed business practices of brokers cost retirement investors up to $17 billion annually—and argued that enacting a fiduciary standard would remedy such.

The DoL actually went as far to make a rule in 2015. This effectively created three standards for a while: the Advisers Act fiduciary duty, the suitability rule, and the DoL’s fiduciary rule—a watered-down version of the Advisers Act covering only accounts like 401(k)s and IRAs. Still, the financial industry panned the DoL’s rule, claiming it would force firms to provide service only to wealthy clients. This would mean, in their view, many investors lacking financial literacy would go without assistance, costing them far more than whatever estimate the DoL conjured. There is potentially some merit in this argument, especially when you consider the DoL didn’t provide an enforcement mechanism for its rule. Your recourse, if you felt wronged, would be to sue your broker or, perhaps, join a class-action lawsuit. That risk could have motivated some firms to restructure departments, product-offerings, and more.

Last April, the SEC unveiled “Regulation Best Interest.” This rule isn’t final yet, with an expected decision to come in September, so it isn’t clear how it would look. To make matters worse and increasingly more confusing for the investors they claim to protect, some states are designing their own versions of fiduciary rules.

The result: A litany of possible different standards, tons of red tape, and probably too many lawsuits to count, with advisors suing the federal and state government, investors suing financial advisors, and so on. Too many rules—that investors don’t understand well—breeds confusion. Just as over the last few decades, brokers have been allowed to use titles like Financial Advisor that blur the line between who provides advice and who sells financial products. The line is also blurred by the fact some brokers are dual-registered. How can clients unpack all this? How do they know who is held to what standard and what that means for them? I know. I also know that the investors don’t know, and that isn’t fair.

Destry Witt writes independently of his business, RELiANCE Investing, Inc., which is a Registered Investment Advisor only. This information is not intended to be personalized. This content is for informational purposes only. Nothing presented here should be construed by anyone as an invitation or solicitation to buy or sell any investment.

This piece was originally published on DestryWitt.com