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A proposal that would require brokers offering retirement advice to adhere to fiduciary standards would be a sea change for the financial industry, requiring increased spending on compliance and record-keeping technology, both supporters and critics say. Where opposing sides of the proposed rules disagree is on how much or even whether investors stand to benefit.

The issue of fiduciary rules for brokers, which has been circulating in the financial industry for years, received endorsement from President Obama last month, when he called on the Department of Labor to move forward with proposed rulemaking.

Much of the issue concerns different standards for professionals who call themselves financial advisors. Registered investment advisors are regulated by the Securities and Exchange Commission (SEC) and already must adhere to fiduciary standards, which means their clients interests must come first. On the other hand, brokers, sometimes called registered representatives, are regulated by both the SEC and the Financial Industry Regulatory Authority (Finra), but they must only adhere to suitability standards. As a result, brokers advice must be suitable for clients but they are not obligated to disclose fees they might have received that could present conflicts of interest.

For supporters, fiduciary rules represent transparency for investors and a level playing field for advisors, says Joanna Belbey, social and media compliance specialist with Actiance. Belbey, who formerly designed compliance educational programs for Finra, says suitability rules date back to when brokers acted more as agents for clients rather than offering advice.

Most investors dont really understand that there are two distinct types of standards that advisors are being held to, she says.

With fiduciary standards, brokers who offer financial advice will have to be prepared to answer regulators questions about why they made certain recommendations, or why they placed certain clients in certain investments, Belbey says. Under the new regulations, firms would likely need communications monitoring technology, like the kind that Actiance offers, as well as other risk management and record-keeping technology. Actiance provides technology for communications governance, including capturing, archiving and maintaining records of email, chat, collaboration technology, social media and more.

Firms are going to need to do a lot of record-keeping around the type of communications advisors are doing with their clients, Belbey says. They are going to need to be monitoring those communications. They are going to need to look at the rationale behind making certain investment recommendations and then they are going to need to prove to regulators that not only are they supervising and monitoring correspondence but that if they see something amiss they are going to do something about it.

The Securities Industry and Financial Markets Association (SIFMA) opposes the rule, partially on concerns that new regulations will drive up costs for middle-class investors.

Statistics are quite clear that the vast majority of American investors, retail investors, choose commission-based accounts because they tend to be buy and hold accounts and are much more efficient, much more cost-efficient, Sifma president and CEO Kenneth E. Bentsen, Jr. said during a Bloomberg TV interview. Brokers who would be affected by the ruling are more likely to work on a commission basis while investment advisors are more likely to charge fees for services.

Yet a White House report argues the investors are already paying a cost. A report issued in February from the Presidents Council on Economic Advisors found that working and middle class families receiving conflicted advice earn returns roughly 1 percent lower each year.

At this point the process is still in very early stages. The Department of Labor will issue a notice of proposed rulemaking in the coming months, and the industry will have the opportunity to comment in writing or a public hearing.

Belbey says she sees the idea of fiduciary rules for brokers gaining increasing momentum.

I really think its the direction the industry is going, she says.