Any financial professionals dispensing financial advice should be required to put their clients' interests first. Period.

But that's not the way it currently works. Today, broker-dealers fall under what's called a "suitability" standard, meaning they must suggest investments that are appropriate for their clients, but could pick a suitable investment that also happens to earn them the highest commission.

Registered investment advisers, on the other hand, must adhere by the "fiduciary" standard, which requires them to think of their clients above all else, including their own paychecks.

Confused yet? Well, let me throw this at you. A financial adviser, or planner, or consultant, or whatever their title, can be both a broker and an adviser, depending on the type of financial transaction they're conducting. As if saving for retirement isn't complex enough!

The Securities and Exchange Commission (SEC) agrees that the current system leaves average investors scratching their heads. In a highly anticipated report released a week ago, the SEC staff recommended that the commissioners create rules requiring anyone dispensing financial advice to be governed by the fiduciary standard.

"Under a uniform fiduciary standard, retail investors can be made more confident in the integrity of the advice they receive as they invest for their own and their families' critical financial goals," the SEC wrote.

The study is an obvious win for the Financial Planning Coalition, a pro-fiduciary standard group made up of industry associations.

But it also received a positive response from the broker-dealer trade group, the Securities Industry and Financial Markets Association. "It will mean that individual investors can walk into any financial institution and talk to any wealth management professional and know that regardless of who they're dealing with, they will have the same level of protection," said John Taft, chairman of the trade group and CEO of Minneapolis-based RBC Wealth Management. The group never opposed a fiduciary standard, but had expressed concern that the standard would favor the fee-for-advice model over the commission-based structure used by many brokers. But SEC staff squashed those fears when it wrote in its report that "It is necessary to ensure that any uniform standard allows and ensures retail investors to continue to have access to the various fee structures, account options and types of advice that investment advisers and broker-dealers provide."

Pockets of resistance remain. The National Association of Insurance and Financial Advisers continues to argue that a fiduciary standard could raise the costs of doing business, shutting out investors who have fewer assets. And the two Republican-appointed SEC commissioners released their own statement, saying they couldn't support the study because it failed to show that retail investors are "systematically being harmed or disadvantaged under one regulatory regime as compared to another." The two suggested that the staff research how portfolios performed and investor complaints were resolved under each standard.

While the professionals I spoke with predict that the fiduciary standard will ultimately prevail, they figured it will be at least a year, if not longer, before it becomes the only standard. And then there's the issue of how and who will police the standard.

Herbert Schechter, managing director for the investment firm Minneapolis Portfolio Management Group, expects that as the specifics of the standard take shape, special interest groups will try to carve out exemptions for their members.

"Fiduciary responsibilities are black and white.,'' he said. "They're like pregnancy, you either are or are not, and there shouldn't be any compromise on establishing fiduciary and disclosure standards to protect the public."

So what does this mean for investors? While the move toward a fiduciary standard is good news, it's nowhere close to a done deal. Even if it were, investors can't ever take an eye off their nest egg.

Not sure if your adviser is a fiduciary? Ask him or her. If the answer is "Yes," ask if he or she is your fiduciary 100 percent of the time, or if there are some transactions that fall under the suitability standard.

Bring up compensation and ask if there are any conflicts of interest that you should know about. I like this question suggested by Spenser Segal, fiduciary expert and CEO of the Plymouth-based financial services consulting company ActiFi: "Is there any possible way [you] can make more money selling one product versus selling another product?"

I know these can be uncomfortable questions to ask, but I wouldn't worry about coming off as untrusting. Good advisers will recognize that this is a topic in the news and should bend over backward to explain how it affects you. If they don't, head for the door.

Kara McGuire • kmcguire@startribune.com or 612-673-7293. Follow her on Twitter: @kablog.