I’ve been telling you for a while that some people who bill themselves as financial advisors are really financial salespeople, which begs the question, “Are they really acting in your best interest?” Apparently, the federal government now agrees with me.

It’s become popular for brokers to market themselves as financial advisors. They tell you they can help you with financial transactions as well as give you financial advice. The problem is, less than half of registered representatives are also registered investment advisors, who have to operate by a higher standard and a much stricter set of regulations.

The Securities and Exchange Commission has approved the Regulation Best Interest, an advice reform package, which says if a broker is not a registered investment advisor, then that person cannot use the title adviser or advisor.

The new regulation requires brokers to reveal to you all material facts relating to the scope and terms of their relationship with you, including whether they are acting as a broker or an adviser. Page 156 of the Reg BI says, “We believe that in most cases, broker-dealers and their financial professionals cannot comply with the capacity disclosure requirement by disclosing that they are a broker-dealer while calling themselves an “adviser” or “advisor.”

In spite of Reg BI, brokers and advisors will continue to be regulated separately. Reg BI requires brokers to put the customers’ interests ahead of their own (Isn’t it a shame such a concept has to be regulated). Investment advisers will continue to adhere to a fiduciary duty to their clients and follow a stricter set of rules.

If you’ve never asked whether your financial person is a broker or an advisor, now is a good time to ask. By law, they have to tell you.