The countdown to dooms—uhh, the deadline for complying with repeal of the broker/dealer rule is creeping onward with less than 10 days left. Since the court ruling in March, some of Wall Street’s largest firms have been grappling to come up with solutions that will satisfy the repeal and move about $300 billion of client assets out of fee-based brokerage accounts. So far, it looks like most firms plan to move the majority of these fee-based brokerage clients, and their assets, into fee-based non-discretionary advisory accounts. These allow advisors to offer “fiduciary” advice, but the investor has the final say about any transactions.

It’s no surprise firms are doing all they can to salvage fee-based revenue, even if it means allowing advisors to act as fiduciaries (a practice wirehouses were initially not too keen on.) Fee-based business provides a substantially more consistent stream of revenue than commission business does. Not surprisingly, the number of dually-registered advisors is going to explode: a recent Aite Group report showed that total assets managed by dually registered advisors (those with a Series 7 license and Series 66) are expected to grow 31 percent through 2008, more than double the rate expected for RIA firms that are SEC-registered only.

With firms deciding to allow more reps to act as fiduciaries on advisory accounts, everyone’s in the clear, right? Well, maybe. It’s not uncommon for one client to hold more than one kind of account with the same advisor. What’s more, in one conversation with his advisor, the investor may have questions that cover both his fee-based advisory account and his separate commission-based account. In this case, the advisor maybe forced to jump between his fiduciary role—where he is obligated to put the client’s interest before his own—and his series 7 licensed “broker” role where he’s only required to offer “suitable” recommendations or advice.

Of course, disclosing that distinction is required when a client opens a new account, according to the firms.

"Our FA's are trained and supervised to make sure that they provide clients with all the relevant and necessary information for our products and services," says Merrill Lynch in a statement. "When enrolling in an advisory service, clients must sign an agreement and are given a written disclosure which describes the services to be provided as well as our status as an advisor and, if applicable, a fiduciary."

But what about after the account has been opened? “Advisors are encouraged to make clear each time they switch roles,” says an executive at one of the wirehouse firms who preferred to remain anonymous. Meanwhile, Alex Samuelson, head of media relations at Smith Barney, says it’s “very common” for Smith Barney clients to have more than one type of account. In addition, he says, these individuals tend to be very clear on what kind of accounts they’ve signed up for. “Fiduciary is a legal term. The nature of the advice advisors offer doesn’t change, because they are always acting in the best interest [of the client] regardless of the legal definitions of the account,” he adds.

But Benjamin Prell, a securities lawyer with Stafford and Associates in Kansas City, Missouri, says brokerage firms should be cautious when dealing with clients that have both advisory and commission-based accounts with one advisor. “Firms are going to be more likely to establish a bright line to guide advisors when something like that comes up. I think it will be a big topic of discussion especially because [wirehouses] have resisted letting advisors act as fiduciaries in the past. Now they are faced with it and are likely going to be careful about it,” he says. And he suggests firms set up a supervisory role that strictly oversees advisors that act as both fiduciaries and brokers in a single relationship.

Dan Inveen, a manager at Seattle-based consulting firm Moss Adams, says some advisors take the distinction between the accounts very seriously: “Some advisors are very deliberate about how they divide a client’s accounts,” he says. For example, one dually registered rep maintained a color-coded system that separated his financial planning business from any transactional business. “I can’t say everyone is that conscientious, but they have to be aware of the legal obligation to keep those two sides distinct,” he adds.

Michael Wible, a lawyer with Columbus, Ohio-based Thompson Hine says, "This is such a personal business, and when you're sitting with a client I dont think youre going to want to say 'Hey, Im not a fiduciary anymore.' But as a good practice, advisors should disclose that sort of information before any sort of financial decision is made to be on the safe side."