• Does the firm have an accredited fiduciary on staff?

• Does the firm invest in products it sells or promotes?

• Is ethics a core component of the firm’s presentation to the client or simply an add-on later in the process?

• Are there conflicts of interest between the firm and the strategies it promotes?

I am not an advocate of increased regulation, and I think there is a tendency to forget that ethics discussions and codes predate the Enron and WorldCom scandals. For decades, undergraduate and graduate institutions have offered courses in ethics—and classes required for accreditation in the financial planning industry are steeped in ethics discussions.

Starting in 1973, the principles of ethics have presided over the Registered Investment Advisor community, but the increase of complexity of business structures and financial products have made them more opaque. Today’s danger is that clients are forced to make decisions without full knowledge of in whose interests their wealth advisor is acting.

That brings us back to the Merrill Lynch Rule. I understand how it came about: The Merrills of the world spend enormous sums of money to blur the issue, attempting to convince investors that there is no difference between a brokerage relationship and a fiduciary one. But ethics are not optional. A responsible wealth manager can’t avoid the fiduciary role that mitigates any conflicts of interest. An adoption of the Merrill Lynch Rule—removing fiduciary responsibility from brokers—could jeopardize the relationship that true wealth managers have with their clients. Ultimately, the investor would have no protection and the industry, no credibility. That would be disastrous for both.

Richard Stone is founder and CEO of Salient Wealth Management, a Registered Investment Advisor in San Rafael, Calif. He is a Certified Financial Planner and serves on the Golden Gate University Financial Planning Advisory Board.