"I suspect a judicial arbiter might draw a sharp line prohibiting most products with higher financial incentives no matter how sound the recommendation might be," Ketchum said.

He also said that the "subjective language" in the DOL's prohibited transaction exemptions leaves brokers with "insufficient workable guidance" to determine if the advice they are giving is conflicted. That uncertainty could force brokers to a fee-based compensation model on IRA accounts, and that, Ketchum thinks, ultimately could drive providers from the IRA market.

"It is not that Labor's conflict concerns don't have validity," Ketchum explained. "It's that I fear that the uncertainties stemming from contractual analysis and the shortage of useful guidance will lead many firms to close their IRA business entirely or substantially constrain the clients that they will serve."

The DOL's focus on disclosing conflicts of interests in advice on 401(k) and IRA assets are "aimed at exactly the right areas," Ketchum said.

But he thinks the rule would apply a different standard to those assets, compared to the rest of investor assets.

"A great many investors simply do not plan for their retirement by segregating tax-advantaged vehicles from their other investment strategies. An effective regulatory environment would apply a consistent best interest standard across, at least, all securities investments and have the examination and enforcement mechanisms to oversee compliance with the standard," he said.

The Securities and Exchange Commission is the right agency to craft a new best interest standard, Ketchum thinks.

"The best interest standard should make clear that customer interests come first and that any remaining conflicts must be knowingly consented to by the customer," he said.

Though similar sounding to the spirit of the DOL's proposal, Ketchum said no new standard should come without the clear guidelines he thinks are absent in the DOL's proposal.

Also, firms should be required to design internal compliance structures to manage potential conflicts of interest.

And a new rule should bring better client disclosure requirements that include "plain English descriptions of the conflicts they may have and an explanation of all product and administrative fees," he said.

He also suggested a new rule incorporating the growing best practice of creating "fee neutrality" across products broker-dealers sell, which would minimize incentives for reps to favor one investment over another.