The government wants brokers and other financial professionals to act in their clients' best interest. That may sound like an obvious plus, but if you're a client, you might well be much happier keeping things exactly the way they are now.

Recently, the administration proposed new regulations that would impose what's known as a fiduciary responsibilityon brokers. In requiring brokers to hold themselves up to that higher standard, the hope is that customers would be less likely to face conflicts of interest or to receive advice that benefits the broker more than the customer.

Helping customers sounds like a noble task. If you don't wantor needhelp, however, regulations imposing a fiduciary duty on brokers could turn investing into a nightmare for you. Let me explain.

What fiduciary duty is
I have a lot of experience with what it means to have fiduciary responsibility. Before I started writing for the Fool, I worked as a trust officer for a mid-sized regional bank. In the bank's role as trustee, it had a full fiduciary dutyto act in the best interest of the beneficiaries of the trusts it managed. As compensation for the risk and effort involved in fulfilling that duty, however, the bank took fairly substantial fees that were based on the amount of assets under management. Depending on the size of the account, those fees often amounted to thousands of dollars annually.

To be fair, our clients got a lot of service in exchange for that fee. Beyond choosing appropriate investments, trust officers routinely handled everything from making health-care arrangements to signing clients up for Medicare and Social Security. If you wanted full-service treatment, opening a trust account could actually end up saving you money versus hiring other professionals on an hourly basis.

I'll go with self-serve, thanks
In contrast, discount brokers, along with those investment professionals who don't currently owe a fiduciary duty to their clients, offer a useful alternative to investors. If you're comfortable making your own decisionsand simply want someone to execute your instructions efficiently and inexpensively, then the last thing you want is to have to deal with someone who is required by law to meet the fiduciary-duty standard. Imagine the following situations:

I'll admit that these examples are a little bit silly, and in reality, you could get around them with a long series of legal disclaimers. But they illustrate a basic point: In order to meet a fiduciary-duty standard, brokers might have to do things a lot differently than they do now -- and clients could face a number of obstacles they don't have to deal with now. Moreover, clients would likely face higher costs as investment companies passed on the expenses of meeting these standards.

Freedom of choice
That's one reason why discount brokers like TD Ameritrade (Nasdaq: AMTD) and Charles Schwab (Nasdaq: SCHW) have come out against the fiduciary-duty standard. As they see it, such a standard would require customers to provide a huge amount of personal information that they'd rather not have to give. And with some financial companies offering both self-service brokerage services as well as full-service professional asset management, applying the same standard to each would essentially force those companies to phase out the self-service portion of their business.

Many ordinary investors are outraged at Wall Street and its excesses, and with good reason. Imposing a fiduciary standard on every single investment professional, however, isn't the best way to protect investors. The better alternative is to teach people to be aware of the industry's traps, allowing them to navigate on their own and make the right choices for themselves.

Do you want the protection of fiduciary duty, or will it just do more harm than good? Tell me what you think about it in the comment section below.

This article was originally published as Why Government "Help" Could Become Your Next Nightmareon Fool.com

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