The SEC’s much anticipated recommendation is out: Brokers should be held to the fiduciary standard.

To date, unlike registered investment advisors who are fiduciaries, brokers have only been required to meet a suitability standard, which is a less rigorous legal requirement. Under a fiduciary standard, brokers will be required to provide their clients with advice that is in the clients’ best interest.

One of the reasons for the SEC’s recommendation is that many investors don’t realize that brokers don’t legally have an obligation to have investors’ best interests at heart. This leads to confusion, financial losses, and distrust of the financial system. With this recommendation, hopefully all that will change. Investors will know that anyone providing retail investment advice to them is held to the highest standard.

It is not yet clear how the actual rules will shake out. Stay tuned.