A stock broker sits in front of a board displaying German share index DAX at the stock exchange in Frankfurt.
A stock broker sits in front of a board displaying German share index DAX at the stock exchange in Frankfurt. - 
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Bill Radke: Senate Majority Leader Harry Reid says he has the votes he needs to overhaul the nation's financial regulatory system. A final Senate vote could come this week. One part of the bill would change the way stock brokers and insurance agents are looking out for their customers. We get the story from Cathy Duchamp.

Cathy DuChamp: Many people are shocked to find out that brokers don't have to put their clients' best interests first. That's according to Barbara Roper with the Consumer Federation of America. Brokers are only required to determine whether investments are "suitable".

But, Roper says, the new regulation would apply a higher standard known as fiduciary duty. Say you have two comparable mutual funds. One of them pays the broker more, but the other would be best for the investor. The broker operating under fiduciary duty would have to recommend the one that's best for the investor. So under fiduciary duty, Stock brokers would apply the same standard already used by registered financial advisors.

Profits for clients would be a top priority over any fees or commissions a broker could make. And conflicts of interest would have to be disclosed:

Thomas Currey: To say that I'm not looking out for the best interests of my clients is a gross oversimplification of the way it works on the street.

That's Thomas Currey, President of the National Association of Insurance and Financial Advisors. He calls the fiduciary duty standard is another layer of regulation that will be hard to enforce. He'll make his case to the Securities and Exchange Commission. It's charged with assessing current rules before putting any new ones in place.

I'm Cathy Duchamp for Marketplace.