First, many arguments commit the classic political two-step of presenting a false choice by framing the nature of the DOL's proposal inaccurately. The DOL, and Phyllis Borzi, have repeatedly said the new rule will not prevent brokers from acting as brokers. The industry can continue to sell securities and charge commissions. In fact, this has never been an issue. At issue – and this is partly the SEC's fault – is the ability for brokers to offer investment advice without following the regulatory guidelines of registered investment advisers ("RIAs").

The 1940 Investment Advisers Act currently exempts brokers if they provide investment advice in a manner only incidental to their primary business. Unfortunately, with the introduction of wrap fees and mutual fund supermarkets over the past two decades, this "incidental" advice appears to have become a more significant part of the brokerage business. In effect, idle regulators have created an uneven playing field where some businesses (RIAs) are subject to regulatory standards while other businesses (brokers) are not despite both businesses providing the same service.

Well, not quite the same service. Brokers do not claim to offer fiduciary services. By definition, RIAs must operate under a fiduciary standard. In the minds of the consumer, however, according to a J.D. Power & Associates survey, investors do not recognize the significance of operating under the fiduciary standard. As a result, they don't see any practical difference between the investment advice brokers provide and the investment advice RIAs provide. If this is the case, what justifies one set of service providers being subject to a regulatory regime while the other is not?

Second, while many acknowledge Borzi's statement concerning academic studies showing broker-sold mutual funds have lower returns than direct-sold mutual funds, they then, by suggesting these studies don't show proof of malicious intent, commit a non sequitur only a snake oil salesman could love.

I'm not a big fan of government regulation, but product safety is generally accepted as a reason to impose regulation. Just ask any food or drug manufacturer whose product was not accepted by the FDA. The FDA doesn't make a decision solely on whether the manufacturer has or intends to cheat consumers.

No, it's good enough to show the product could, will or even might harm some subset of consumers in order to withhold that product from the marketplace. Borzi alludes to studies like the one Fiduciary News reported on in January of this year. This research, sponsored by the NBER, shows the average investment return of broker-sold funds trails direct-sold funds by 1%. This includes the impact of the funds' expense ratios but does not include the impact of brokerage commissions or "costs."

Which brings us to the third point – the lack of any evidence of the impact of "cost." To be clear, any broker wishing to transition to an adviser will incur greater operating costs – at least temporarily. Whether brokers choose to pass those temporary costs on to their customers is a business decision they will have to make. To hypothesize adding the "fiduciary" label to brokers offering investment advice will result in a rise in direct costs is a hypothesis we don't have to test in a theoretical vacuum – it's happening in the marketplace right now.

Indeed, Fiduciary News recently ran the results of its own series of industry interviews. After taking into consideration all fees charged, most RIAs would gladly compare their fees to those of brokers. In some cases, the fee savings of a retirement plan switching from a broker-adviser to an RIA can be as much as 300%. This includes large 401(k) plans in additions to small IRAs.

This is not to say the broker business model should be outlawed. Investors who don't seek to reduce their fiduciary liability can still make investment decisions themselves and continue to purchase securities from brokers. And, just like people who cook their own meals instead of going out to a restaurant, do-it-yourself investors will find their costs will be less versus those who delegate investment duties to third parties.

But don't get caught comparing the apples of do-it-yourselfers to the oranges of delegators. The DOL's proposed definition of fiduciary will apply only to the delegators, not the do-it-yourselfers, just like the health department inspects only restaurants, not family kitchens.

Government regulators have an obligation to level the playing field by either removing regulations on RIAs or add regulations to brokers acting as RIAs. Either way works, however, only one way protects investors. After all, would you eat at a restaurant that fails its health inspection?