It's still unclear what regulatory reform will look like, but Tom Bradley, CEO of TD Ameritrade's institutional unit, says small RIA firms may need to consider merging with other firms or outsourcing legal, compliance and other operations.

Speaking at the Financial Planning Association's annual conference in Denver, Bradley talked about how increased regulatory requirements will force RIAs, particularly smaller ones, to scrutinize their costs more closely.

Mergers and outsourcing aren't the only options. In an interview after the talk, he acknowledged another option could be for a group of small RIAs in a given metropolitan area to pool their resources and create a firm to address their own legal, compliance and other operational issues.

The savings can be significant. Bradley cited one three-person firm that outsourced daily reconciliation and saved 24 work days and $12,000.

On the fiduciary issue that still has to be defined, Bradley voiced concern about the widespread lack of understanding. This became apparent when he asked former presidents George W. Bush and Bill Clinton about the subject of fiduciary responsibility last February at TD's annual conference earlier this year.

Bush passed on the question, conceding he wasn't knowledgeable enough to have an opinion. Clinton, on the other hand, spoke for an extended period, employed lots of catchy buzzwords in mellifluous sentences and yet rarely got within 100 miles of the key issues. Surprise, surprise.

Bradley also mentioned an appearance he made on CNBC's Squawk Box several months ago when he encountered a reception bordering on hostility from one of the hosts. After being introduced, former broker and anchor Joe Kernan began the interview by declaring that he thought they were going to interview Tom Brady, the New England Patriots' quarterback, not Bradley.

Kernan, viewed by some as biased towards Wall Street, drifted around the subject and then said his parents went to an independent advisor with $200,000 and were charged more than $30,000 in commissions. It may have been accurate, but Bradley said it was highly doubtful that the advisor was a fiduciary. Whatever the motivation, the interview likely left viewers more confused than ever.

Bradley said he thought the SEC needed to separate the fiduciary issue from the sales vs. commission issue. Back in 1934 when the SEC was created, brokers sold new issues and other securities and advice truly was incidental. What went wrong was when brokers started offering serious advice without assuming fiduciary responsibility.

"You don't need more regulation, you need better regulation," he told attendees.