Every market decline brings calls for new rules and regulations. Today, there is a battle cry to place a fiduciary obligation on retail brokers. But the real question is: What difference does it really make?

Those with an agenda are making noise about brokers not being fiduciaries, but their claims are simply not true.

Some organizations have claimed that under a suitability standard, a stockbroker only needs to provide "suitable advice," even if he knows it's not the best advice. Others claim that broker-dealers are free to receive higher commissions and fees for recommending certain investments, even if another product might be a better option.

Neither of these statements is true. Recommending a security to a client when another security or product would be better suited for the customer is a violation of the suitability rule, if not FINRA's fraud rules. FINRA would award compensation to a client who is sold a product simply because it had a higher commission.

Almost by definition, if there is a product better suited to a client's needs, the recommendation of a lesser product may violate suitability rules.

Fiduciary duties arise from the nature of the relationship between the parties. In the traditional retail broker relationship, the broker is acting like a real estate broker, or a business broker. He is bringing two parties together to effect a transaction. The broker is a fiduciary to his customer-with respect to the execution and clearing of his client's transaction.

The retail stockbroker is not responsible for monitoring his client's positions, nor is he charged with the responsibility to recommend a sale of any position or recommend the purchase of any security. Investment advisors, on the other hand, are paid to provide ongoing investment advice, and are compensated accordingly-by a monthly fee.

But this distinction is by no means clear to the average investor, and the financial services industry is partly to blame for the lack of clarity. Firms call their brokers "advisors" or "financial consultants" when in fact they are stockbrokers. Some firms charge flat fees instead of per-transaction commissions, causing stockbrokers to look like investment advisors. Customers are understandably confused.

The solution to the problem is already in place. The solution was to have retail brokers register as investment advisors, which they did. When they are offering investment advice, they are acting as investment advisors, and have an obligation to their clients to act in the customers' best interests. When they are merely acting as a broker, their obligations are limited to the transaction at issue.

The solution is a continuation of the education of the investor. Investors who want investment advice need to hire an investment advisor. Those who want stock execution, or a recommendation of a stock to purchase, need to use the services of a retail broker.

Merging the two different functions is not the answer, and clearly Congress is not going to eliminate the retail stockbroker. Which brings us full circle. Retail brokers have a fiduciary obligation to their customers, to make recommendations and to provide execution of orders.

Passing a law that requires brokers to conduct themselves in a manner consistent with a fiduciary standard is simply a law that requires a broker to do that which he is already required to do. And, it is much ado about nothing. ows

Mark J. Astarita, Esq. represents stockbrokers and investment advisors nationwide.