An October 10, 2014 New York Times article featured yet another consumer belatedly questioning whether the financial advice they were given by an investment broker was truly in their best interests. The couple in the story say they didn’t realize that their broker wasn’t required to follow the most stringent requirement for financial professionals, known as the fiduciary standard. In a nutshell, that fiduciary standard obligates the advisor to provide advice that is always 100% in the consumer’s interest.

Many people think that they are getting that kind of advice when they are not, said Arthur Laby, a professor at the Rutgers School of Law and a former assistant general counsel at the Securities and Exchange Commission. According to Professor Laby, “…brokerage customers are, in a certain sense, deceived. If brokers continue to call themselves advisers and advertise advisory services, customers believe they are receiving objective advice that is in their best interest. In many cases, however, they are not”.

Brokers, like those at banks, credit unions and so-called wirehouses, are technically known as registered representatives. They are required only to recommend “suitable” investments based on an investor’s personal situation – their age, investment goals, time horizon and appetite for risk, among other things. While “suitable” may sound like an adequate standard, there is a giant loophole. It can mean that a broker isn’t required to put a customer’s interests before his own.

There are some specific situations when brokers must act as fiduciaries. For example, they must do so if they charge a fee to manage an investment account that is based on a percentage of the total assets, or when they are given discretion – or full control – over an investor’s account. But under the current rules, a broker can take quietly remove his “fiduciary hat” and recommend merely “suitable” investments for the same customer’s other accounts. Confusing, to say the least.

To make matters worse, many brokers call themselves “advisers”, a term that suggests that consumers can trust their advice and guidance as much as they might trust the family doctor’s. For example, Merrill Lynch recently introduced an approach called Merrill Lynch Clear. The wirehouse advertises this approach on its website as a conversation with a “trusted adviser”, though not all of its “advisers” are legally bound by a fiduciary duty.

Investors are arguably best-served by simply paying for advice through “fee-only” independent financial advisors who are fiduciaries. Independent advisors typically charged from 0.85% to 1.15% of assets at the end of 2013, according to Cerulli Associates, though fees can vary depending on how much you have to invest. There is also always the additional cost of the underlying investments, though they can be quite low, depending on the advisor’s investment approach. Often, in addition to investment advice, those fees will cover limited or comprehensive financial planning guidance, addressing such issues as insurance and risk management, estate planning, and tax matters.

Other fee-only advisors charge a single flat fee or hourly fees. The National Association of Personal Financial Advisors and the Garrett Planning Network are groups of fee-only planners, many of whose members offer flat or hourly fees.

Finally, if consumers really want to put a prospective advisor to the test, they can simply ask them to sign a fiduciary oath. Such an oath would likely be binding in an arbitration proceeding, which is how most customer disputes are settled. An “advisor” who refuses to sign the oath should probably be avoided.

You can read the entire New York Times article here.