Editor's note: A previous version of this article incorrectly included Charles Schwab (NASDAQ:SCHW) among companies converting fee-based accounts to brokerage accounts. We regret the error.

If you're one of about a million Americans paying yacht ... er ... account fees to your broker-dealer, the SEC has some news for you. The good news: effective Oct. 1, a broker-dealer can no longer charge fees for investment advice unless it agrees to act as a registered investment advisor (RIA) with fiduciary responsibility for its clients. What a concept!

The issue came to the fore in 2005, when Raymond James Financial (NYSE:RJF) was fined $750,000 for pushing fee-based accounts on clients with negligible transactions: The firm eventually shut down its fee-based brokerage business. Then, in March, a U.S. Appeals Court overturned an SEC ruling that broker-dealers could offer advice without being RIAs -- hence bearing no explicit fiduciary responsibility.

Fidu-who?
According to the SEC, a broker-dealer RIA is a fiduciary, meaning that it has a fundamental obligation to clients to act in their best interests, owing them undivided loyalty and utmost good faith, and no conflicts of interest. RIAs must try to avoid misleading clients and provide full and fair disclosure, and not use client assets for their own benefit, at least without the client's consent. 

Some brokers have responded to this much tougher standard of accountability by automatically converting fee-based accounts to transaction-based accounts where the ball's in your court -- they earn only when you churn. Merrill Lynch (NYSE:MER) is still (conditionally) charging $25 per quarter for minimum balances and $29.95 or more for online trades. 

So what's the catch?
The not-so-good news is that bulge bracket brokers like Merrill now get to charge you even more, if they can entice you into an "advisory" account where you pay for their valuable advice on what to do with your money. If you really, really trust them, you can sign up for a "discretionary advisory" account, where they get to make transactions on your behalf without consulting you first. There's also a "non-discretionary" version -- which Morgan Stanley (NYSE:MS) offers with a minimum $25,000 investment -- where you still get to decide whether to take their advice on trades.

Regardless, you're still open to offers of so-called principal transactions in assets your broker holds. In theory, this helps you get better prices and privileged access to hot opportunities. In practice, they can now dump on you the hot potatoes they're stuck with, a la Salomon's AT&T (NYSE:T) bonds in Michael Lewis' Liar's Poker.

Before you decide to turn over everything you have to your broker, you should know one thing. In 2003, a Who's Who? list of these very bulge bracket brokers had to cough up a total of $1.4 billion in penalties for fraudulent research reports and inappropriate spinning of hot IPOs. That's not peanuts -- even on Wall Street.

An SEC oops
And to close on a comic note, the SEC's advice on the subject includes a devastating typo:

"Before you invest or pay for any investment advice, make sure your brokers, investment advisers and investment adviser representatives have had run-ins with regulators or other investors." [Emphasis added.]

So ignore the SEC's advice here and look for professionals who have managed not to have any problems with regulators. You'll be glad you did.

For related Foolishness: