Consider this odd fact. At the time Moynihan wrote these words, there was no question one acting under a fiduciary duty could not engage in prohibited self-dealing transactions. In the wonderful world of investment advice, this meant the advisor was prohibited from entering into a transaction which would generate a commission (or any other form of revenue) for that adviser.

Said another way, and a message branded into my young brain upon first embarking on a career in investment management, "an investment advisor cannot charge a transaction-based fee."

This simple phrase distinguished the investment advisor from the broker. An investment advisor received compensation through an asset-based fee, while a broker got paid through trading commissions. In the trading of stocks and bonds, the commission could be charged in a cents-per-share manner, a pure ticket manner or implied through a spread.

In the trading of mutual funds, commissions could be charged either in a way similar to stocks, or through front-end/back-end loads or through 12b-1 fees. (Thirty years ago the concept of revenue sharing arrangements had yet to be fully developed.)

With the rise of discount brokers and cut-rate commissions, the salad days of the brokerage industry vanished. To recapture revenues, brokers exploited a loophole in the 1940 Investment Advisers Act. The industry evolved from brokers to financial consultants to investment consultants to financial advisors.

Along the way, they rode on the wings of the suitability standard rather than the fiduciary standard. Regulators helped ease this transition by such carve-outs as the "Merrill Rule" (since rescinded), the Frost Advisory Opinion and even the declaration that a 12b-1 fee of 75 basis points or less would no longer be considered a commission. 

Traditional investment advisers – those registered with the SEC – ignored this otherwise distasteful trend because, after all, these uncouth parties were still "brokers" by any other name. 

What watershed event led to the current fiduciary war I cannot remember, but the war did start well before Dodd Frank and a dysfunctional SEC muddied the waters. Whatever straw broke the camel's back, it was clear Registered Investment Advisers were collectively mad and weren't going to take it anymore. They pressed the SEC and the DOL to enforce the strict tenets of the fiduciary duty. They didn't mind competing against the brokers, they just asked for a level playing field. 

We were so close. Despite the SEC placing politics ahead of consumers, the DOL seemed the steady-eddy, confidently leading us to the fiduciary promised land. The DOL even wanted to broaden its kindness to include IRA holders under the ERISA umbrella of protection. When it backed down last September, we thought it was only because of the IRA issue.

And when the DOL was nice enough to consider the research of those opposed to the fiduciary rule, these enemies suddenly decided the months-old data could not be produced "on short notice." That appeared to be the final nail in the coffin. The DOL had no reason not to proceed with its original plan.

But now comes word from no less than Michael Davis, deputy assistant secretary at the Labor Department. Speaking in the enemies' lair in New Orleans, he said, "We will have a set of prohibited transaction exemptions … and we're working on getting it released as a package." There's that stuffy little word again: "exemptions." 

Hark back to Moynihan's warning: "…we have been redefining deviancy so as to exempt much conduct previously stigmatized…"

Thirty years ago, it was clear a fiduciary could not enter into a self-dealing prohibited transaction – an investment adviser could not charge a transaction-based fee." 

It appears the DOL is now preparing to define fiduciary down.

Should this be the case I can promise you this: The DOL may call these vendors whatever they like, but I can tell you one thing they are not. They are not fiduciaries.