.bodytext {float: left; } .floatimg-left-hort { float:left; margin-top:10px; margin-right: 10px; width:300px; clear:left;} .floatimg-left-caption-hort { float:left; margin-bottom:10px; width:300px; margin-right:10px; clear:left;} .floatimg-left-vert { float:left; margin-top:10px; margin-right:15px; width:200px;} .floatimg-left-caption-vert { float:left; margin-right:10px; margin-bottom:10px; font-size: 10px; width:200px;} .floatimg-right-hort { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 300px;} .floatimg-right-caption-hort { float:left; margin-right:10px; margin-bottom:10px; width: 300px; font-size: 10px; } .floatimg-right-vert { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px;} .floatimg-right-caption-vert { float:left; margin-right:10px; margin-bottom:10px; width: 200px; font-size: 10px; } .floatimgright-sidebar { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px; border-top-style: double; border-top-color: black; border-bottom-style: double; border-bottom-color: black;} .floatimgright-sidebar p { line-height: 115%; text-indent: 10px; } .floatimgright-sidebar h4 { font-variant:small-caps; } .pullquote { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 150px; background: url(http://www.dmbusinessdaily.com/DAILY/editorial/extras/closequote.gif) no-repeat bottom right !important ; line-height: 150%; font-size: 125%; border-top: 1px solid; border-bottom: 1px solid;} .floatvidleft { float:left; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} .floatvidright { float:right; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} Debate over the fiduciary role of financial advisers has heated up this summer following a recent federal appeals court ruling that requires broker-dealers, when acting in an advisory capacity, to follow the same rules as registered investment advisers.

A March 30 ruling by the U.S. Court of Appeals for the District of Columbia Circuit determined that investment broker-dealers are no longer exempt from the fiduciary requirements of the Investment Advisory Act of 1940.

That exemption, known as the “Merrill Rule,” had allowed broker-dealers to provide investment advice for a fee, subject to certain disclosures, without being subject to the fiduciary rules that registered advisers must follow. Generally, fiduciary rules require that advisers act in the best interests of their clients and disclose any potential conflicts of interest.

The ruling was a victory for the Financial Planning Association, which sued the U.S. Securities and Exchange Commission to challenge the exemption. On June 25, the court granted a 120-day stay of the ruling to provide investors and brokers more time to respond.

If brokers offer some investment choices that provide them better commissions, that could lead to conflicts of interest about which investments they recommend to clients, said Walt Mozdzer, a wealth coach with Syverson Strege & Co. in West Des Moines. The fee-only firm is a member of the National Association of Personal Financial Advisors, which through its Focus on Fiduciary campaign is promoting a strong fiduciary role for advisers.

“If you’re going to practice pieces of financial planning as a profession, you should be held to the same standards as the fiduciary advisers, the registered investment advisers,” Mozdzer said.

Others in the industry, however, say if the ruling stands, it will dramatically limit investors’ choices.

“Consumers prefer to have a range of investment choices instead of being forced into cookie-cutter accounts with a single type of investment professional,” said Marc Lackritz, president and CEO of the Securities Industry and Financial Markets Association. In a survey of investors the group released in May, 82 percent of investors polled indicated they prefer to have a choice between transaction fees or annual fees, he said.

Holmes Murphy Financial Services in West Des Moines has about 600 fee-based brokerage clients who will be shifted to an investment adviser relationship to comply with the ruling, said Grady Holt, the firm’s director of investment advisory services. The firm began sending out letters and notifying clients by phone of the change last week, he said.

Because most of Holmes Murphy’s clients already have advisory accounts, “for us, the change is not going to be too hard,” Holt said. “Our stance is that we feel it’s in the best interest of clients to be in an advisory relationship. We don’t have anybody at our firm that is providing bare-bones brokerage access; everybody here is already IAA-licensed.”

Holt said most of his firm’s clients will experience no changes in the way their money is managed or the way they pay fees. It’s likely “fewer than 5 percent,” those who may not have received investment advice in the past, may now be charged higher fees and be given access to advice.

NAPFA, meanwhile, plans to increase its investor education efforts through its fiduciary campaign. Its online materials at www.focusonfiduciary.com include a multimedia Flash presentation and a podcast.

Mozdzer noted that NAPFA has conducted investor surveys that support its position, among them that 97 percent of investors polled said they would prefer an adviser who adheres to a fiduciary responsibility.

Details of how the industry will implement the ruling have yet to be worked out, Mozdzer said.

“I think the brokerage industry is either going to have to agree to take on this role as fiduciary advisers, or be more clear in the disclosures they make to clients that they are not fiduciaries,” he said. “The one question people should ask their financial adviser is: ‘Do you have a legal obligation to act in my best interests?’ If the answer is yes, then that person is sitting on the same side of the table as you.”