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The brokerage industry fought the Labor Department’s new fiduciary rules every step of the way.

The battle seems to be over, and it ended in something of a draw. The brokerage industry may not like the new rules for retirement accounts, but it’s still free to do business as usual on taxable accounts. And many family investors remain as confused as ever about whether their broker has a conflict of interest.

These new rules address conflicts of interest for brokers and other financial professionals who provide retirement advice by requiring advisers to adhere to a fiduciary standard when managing assets in retirement accounts.

Many lay people are confused about what this means and what professionals have a fiduciary responsibility to their clients. In its simplest form, a fiduciary standard means that professionals subject to the standard must put the best interests of clients before their own benefits when offering financial advice or making investment decisions. For example, a trustee is not only required to offer appropriate investment options, but must take special care to avoid conflicts of interest whenever possible and disclose potential conflicts when they arise. The Investment Advisers Act of 1940 specifically defines the role of a trustee, and the Securities and Exchange Commission is tasked with enforcing the rule thoroughly.

Until the new rules went into effect, SEC-registered investment advisers were subject to this standard, but stockbrokers, insurance agents and other professionals who provide investment advice were not. Instead, they were subject to the less strict suitability rule. This rule requires brokers to make recommendations consistent with the best interests of the client, which means that they cannot recommend totally inappropriate investments. But they are not required to put their own interests below those of the client, which allows them to favor more expensive investments or trade more frequently to generate more commissions. They are also not required to disclose conflicts of interest.

The new rules hold brokers to the fiduciary standard that applies to RIAs, but only for retirement accounts. For taxable accounts, the eligibility rule still applies.

A highly publicized survey from a few years ago found that many people mistakenly believe that brokerage firm financial advisors are fiduciaries; 76 percent of those surveyed thought so. (1) The same survey suggested that most investors were unaware that different standards applied to investment brokers and registered investment advisers.

Many brokers will take advantage of their customers’ confusion, apathy, or both to put these mandatory changes in the best possible light. For example, a couple I know work with a broker at a major wealth management firm. The broker manages his portfolio, including retirement accounts, which means he’s subject to the new rules. He told his clients that the investments in their retirement accounts had been underperforming, so he would move the assets to better-performing and less-expensive alternatives.

I asked if the broker had mentioned any other reason for the change, since it seemed obvious to me that the broker was acting in response to the new Department of Labor regulations. No, they told me, he did not mention other reasons.

It’s not hard to see why a broker would prefer to informally present such a change as his own good idea. We all want to present our professional services in the best possible light and, of course, he would rather be the hero saving a client money than the villain forced to put the client’s interests first because the government said what he had been doing was already it is not legal. Not talking about the new regulations is not completely misleading; many customers may not be interested in a detailed explanation. And changes are required to be mentioned in written disclosures, however voluminous. But this does not help investors to better control the situation.

The incident highlights a real and ongoing problem in the world of personal finance, one that the new rules do not effectively address. For many consumers, it’s unclear which financial professionals are sitting on their side of the table and which are salespeople first and foremost. Everyone wants to appear useful; many of the terms and titles say little to consumers unless they dig deeper. “Financial advisor” can mean many different things, depending on who the advisor works for and what exact services the firm provides.

Department of Labor rules require committing to fiduciary standards, disclosing any potential conflicts of interest, and instituting policies that advise mitigating any conflicts that arise. But how many advisors will take the time to make sure clients read and understand the paperwork, instead of just marking the places where the client is required to sign what they assume is standard legalese?

For now, proactive clients will continue to be better served by asking their advisors, or potential advisors, directly if they are fiduciaries. In fact, it should be one of several questions, such as how often are investments monitored, what is the adviser’s underlying investment philosophy, and how does the adviser’s fee structure work? But the concern behind the new Labor Department rules is that many investors don’t know how to ask these questions in the first place.

While the new rules are useful, they are not enough to ensure that consumers can make the best possible decisions. Consumers need real education on what a fiduciary is, whether or not your advisor is, and why the distinction matters. We cannot reasonably expect non-fiduciary advisers to voluntarily provide such education if they are not required to do so.

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1) Bloomberg, “‘Clueless’ Investors Think Brokers Are Fiats, Survey Says”