In reality, according to ICI data, only one in 10 plans use 12b-1 fees (however, more plans may be subject to less transparent revenue sharing arrangements). But this doesn't eliminate the question of serving two masters. It just transfers it from the plan sponsor to the vendor. And this is a more important question in light of the CRR study, which reveals the dramatic impact 12b-1 fees have on the IRA market.

Let's review this again. The purpose of 12b-1 fees is to offer compensation for selling a mutual fund and a mutual fund can only offer 12b-1 fees when it's in the best interest of the mutual fund to do so. Consistent with this, a broker is paid a 12b-1 fee for selling the fund. A wide array of studies have shown funds that are sold by brokers (and presumably for which they receive just compensation for) underperform those funds that do not pay brokers compensation. In fact, such underperformance is often much more than the typical asset-based fee.

From the above, we can conclude someone knowingly selling funds that consistently underperform is not acting in the best interests of the investor and is therefore not a fiduciary. That's OK. In our culture, a salesman is under no obligation to act with the duty of a fiduciary. In fact, if we are to believe the original of the Latin phrase caveat emptor ("let the buyer beware"), this non-fiduciary custom goes back at least as far as Roman times.

But an advisor is not a salesman. An advisor is an objective analyst. That's why advisors have long been held to the rigors of fiduciary duty. An advisor cannot act in the capacity of an objective advisor if a conflict-of-interest exists. This is why we have the custom of "recusal" in our society (primarily in the judicial system). No man – no advisor – is expected to faithfully serve two masters. This is why we allow people to recuse themselves.

Of course, all this talk falls on deaf ears to the average investor. And until Washington decides to enforce the original definition of advisor and remove all the scabs of exemptions past regulatory regimes have allowed, it's unlikely those ears will hear anything.

All is not lost, however. The fourth estate has the power to reframe the discussion. Perhaps we – journalists, writers, bloggers, radio/TV personalities and multi-media digerati – can all help consumers better understand the significance of conflicts-of-interest by only calling someone an "advisor" if that person has no conflict-of-interest and by calling anyone with a conflict-of-interest a salesman.

That'd clear things up in an instant.