The Securities and Exchange Commission continues to debate if the fiduciary standard that applies to registered investment advisors should be extended to broker-dealers. Not to be outdone, the Department of Labor has been debating if advisors to retirement assets should also comply with the fiduciary standard. The issue received even more attention recently when President Obama announced that he will support efforts to have the fiduciary standard imposed upon retirement advisors.

The fiduciary standard requires advisors to put their clients’ interests first. Broker-dealers are regulated by a suitability standard which states that investment recommendations must be suitable for clients.

The news media, not surprisingly, has been spilling much ink over the topic, especially with President Obama weighing in on the matter. As a result, it’s likely that investors will become aware of the issue and ask their advisors if they comply with the fiduciary standard. Even if clients don’t make such inquiries, advisors would be well-served to hone their marketing messages to include communications on the topic.

Registered investment advisors can easily take the high ground. Simply put, they can reach out to existing clients and prospects and explain that many investors have become familiar with the debate due to the frequent press coverage of the matter. They can then emphasize that they have become registered investment advisors because they believe the fiduciary standard provides a high level of protection for investors.

Advisors can explain that their compensation doesn’t change based on the investments that they recommend, so they can remain objective when building client portfolios. Advisors may also explain that they support extending the fiduciary standard to broker-dealers and retirement plan advisors in order to provide protection for all investors.

Hybrid advisors, or those that can charge either fees or commissions, can also develop compelling marketing messages that address the issue. Such advisors should explain that in some cases, clients’ expenses will be lower when sales commissions are charged. That’s especially true when portfolios require infrequent trading of mutual fund shares.

In such cases, advisors should be prepared to show models that illustrate the overall expenses of proposed portfolios with fee-based or commission-based compensation schemes. Hybrid advisors who use third-party investment researchers, such as Morningstar, can also promote that they depend on objective analysis of mutual funds when forging recommendations.

At first blush, it may appear that broker-dealers are at a disadvantage in responding to the fiduciary debate. After all, the proposals to mandate the fiduciary standard are targeted to advisors who receive commissions. Yet, brokers can emphasize that the fiduciary standard isn’t foolproof.

Indeed, registered advisors have had their share of regulatory issues. In some cases, registered investment advisors have inappropriately “pumped and dumped” thinly traded securities in clients’ accounts to temporarily inflate account balances on the days when asset-based fees are calculated. Fee-based advisors have also been caught conducting Ponzi schemes and other types of infractions. Brokers can then maintain that the important issue is the integrity of the individual advisor rather than the regulatory framework that an advisor must comply with.

Brokers should also explain that clients can check on registered reps’ backgrounds by going to the Financial Industry Regulatory Authority’s BrokerCheck database. Brokers can also maintain that, like hybrid advisors, they use third-party researchers to assist with evaluating mutual funds and other products. Registered reps should emphasize that their livelihood depends on their reputation so it is in their best interest to maintain high ethical standards when serving clients.

One concern of regulators has been the temptation of advisors to recommend that clients roll 401(k) accounts in low-cost plans into individual retirement accounts that may have higher fees. With that in mind, registered reps should be able to explain how they formulate their recommendations.

For example, how important are fees when a registered rep is evaluating investment products for individual retirement accounts? Does the advisor ever recommend that a client keep his or her assets within a 401(k) plan because the program has attractive investment options and low fees?

In the long run, of course, advisors’ reputation and ability to generate referrals from clients is a major driver for building a successful business. With that in mind, integrity counts, regardless of the compensation and regulatory schemes that an advisors embraces.