(Dow Jones) Wirehouse brokers aren't sensing a lot of big changes ahead from financial overhaul legislation. An across-the-board fiduciary standard included in the bill would be more of an annoyance than anything else, lawyers say.

The regulatory overhaul bill now awaiting final U.S. Senate action would give the Securities and Exchange Commission the power to hold traditional brokers to a fiduciary standard like that of investment advisors.

Since 2007, when the SEC's so-called Merrill Rule exempting brokers was overturned, many wirehouse advisors have been acting as fiduciaries over at least some of their accounts. They have to adhere to this higher standard with fee-based accounts, while they can follow the lower standard of suitability when recommending investments in commission-based accounts. However, some brokerages have placed the fiduciary responsibility on the firm, rather than the individual advisors, by registering it as the investment adviser.

Laura Corsell, a former staff attorney with the SEC, now at the law firm Montgomery McCracken Walker & Rhoads, specializes in regulation and its effect on financial advisors and brokerages. "Brokerage houses are subject to headline risk," she says. "The last thing they want is to be sued for something. So, if the SEC imposes a fiduciary standard on all brokers, the brokerage houses are going to have extensive training and supervisory compliance in place to ensure their brokers are adhering to the SEC's definition of fiduciary relationships, which will be irritating to brokers.

Corsell says brokers are already familiar with the difference between a fiduciary standard and a suitability standard, but they are going to have to deal with a lot of extra documenting and supervisory oversight.

"From an internal and compliance level, the brokerage firms as a whole will be a lot more affected than the individual brokers, though I'm not trying to minimize the effect it will have on the brokers," Corsell says. "It's going to be a big deal for them to keep track of the documents and ensure they adhere to best-practice standards. All those back-office things affect your business wildly.

Daniel Bernstein, a financial services attorney at Hamburger Law firm and director at MarketCounsel, a regulatory consulting firm, focuses on compliance and regulation for financial advisors.

"The fiduciary standard aspect does have the potential to make an impact, but that would still mean the SEC has to go through with it, because the bill just gives the SEC the ability to do what they think is right," he says.

"If they do make the fiduciary standard mandatory, it just means the advisors have to do what's in the best interest of the client," Bernstein says. "It doesn't mean you have to invest a certain way. So it shouldn't affect advisors' investment strategies, just which particular securities they can sell the client.

"There would be more training and oversight, but because of the overturning of the Merrill Rule, most wirehouse advisers serve in a dual capacity already, so it won't be a complete shock to the system to most of them," he adds.

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