After thinking more about the two reregulation bills working their way through Congress, it occurs to me that there is a faint silver lining on the horizon. How faint depends on who you talk to.

The Dodd bill in the Senate addresses the issue of a fiduciary duty for all financial advisors by eliminating the broker exemptions to the Investment Advisers Act of 1940. I’m sure you’re all aware that’s the part of the Act which says if you give investment advice incidental to the sale of securities, you don’t fall under the requirements of an RIA, including that pesky duty to put the interests of your clients first. By simply plugging that loophole, the Dodd version of the Investor Protection Act would mean that anyone who offers investment advice would need to register as an investment advisor and become subject to all the restrictions and duties thereof.

This approach to advisor regulation finds a warm spot in my heart, both for its simplicity and for its far-reaching implications. Instead of reopening the can of worms about what a “fiduciary duty” really means, it simply subjects all advisors to the already existing fiduciary duty that is well established for current RIAs. And we don’t really need to bicker much about when the fiduciary would apply: If you give advice, you are a fiduciary.

But the real beauty of just dropping the broker exemption is that it doesn’t really matter who regulates it. Yes, I understand there’s more to being an RIA than just the fiduciary duty, but with apologies to all you compliance officers out there, to my mind, the record-keeping, and the disclosure and the custody issues are all short strokes. From the clients’ perspective, fiduciary is king, whether they know it or not.

So if FINRA wants to regulate the brokers cum RIAs, frankly that makes good sense–since they’re doing it already. Heck, if FINRA wants to regulate all RIAs, I say “who cares?” As long as all those brokers, and insurance agents, and financial planners have a fiduciary duty to their clients, we’re not talking about arbitration, anymore. The final arbiter of whether an RIA violates his or her duty is the courts, and they tend to be notoriously client-oriented. As do professional financial advisors.

The only rain on my happy parade here is that many observers are not optimistic that the Dodd version of the Investor Protection Act will prevail. Of course, at this point, nobody really knows. But what I do know is that it will have a much better chance if the professional advisory community aggressively gets behind it as the far better solution. I can’t see why they wouldn’t: Eliminating the broker exemption is what we’ve all been talking about since I started covering financial advisors 25 years ago.