In January, the SEC submitted a recommendation to Congress to adopt a "universal fiduciary duty" that would include any financial professional that provides personalized investment advice to retail customers. (For more info, click here.) This month, the U.S. Department of Labor held hearings to debate a proposal that would expand the "fiduciary" duty of the Employee Retirement Income Security Act (ERISA) of 1974 to include "anyone who renders advice to a retirement plan or participant for a fee or who provides advice or recommendations on the management of securities." This expanded duty could, under the Department's proposal, also be applied to Individual Retirement Accounts. (Click here, for more information.) While individual investors and the majority of Americans may not know it, both the SEC's recommendation and the Department of Labor's proposal have been extremely controversial with numerous industry professionals weighing in on either side. The heated debate centers on the fact that under current law there is a big difference between a "registered investment adviser" (a professional who must act as a "fiduciary") and a "broker-dealer" (a professional who, under many circumstances, can get away with a much less stringent standard). Until the debates are resolved and a final decision made, it is important that investors understand the crucial difference. "Are you a registered investment adviser?" should be the first question you ask anyone who wants to give you advice on your portfolio or retirement account. A registered investment adviser is legally required to act as your "fiduciary," which means that any advice or recommendation that he or she gives you must be in your best interests. In contrast, under current regulations, a broker-dealer only has to recommend a "suitable" product. As reported in "When Your Adviser Can't Be Trusted" (Wall Street Journal, March 12, 2011), this means that a broker-dealer can still comply with regulations if he or she recommends the "least suitable of suitable investments," which many will do if it means a higher commission for them. If this seems like a rather arbitrary distinction to you, you're not alone. Many investors either don't know the difference between registered investment advisers and broker-dealers or don't understand the difference. That is the main reason the SEC and various regulatory bodies are pushing for the expanded definitions. For now, you can protect yourself by knowing where your financial professional's interests lie.