If you’re like most registered reps these days, you’ve got some portion of your clients in a fee-based compensation arrangement. And, no doubt, you’ve been selling yourself as a full-service, top-to-bottom “financial advisor,” financial consultant, wealth manager or some other such glorified title. (Does anyone’s card read stockbroker anymore?)

But from this day forward, there’s a high likelihood that either you, or the nature of those accounts, is going to change. That’s because on March 30th a panel of judges in the Court of Appeals for the D.C. Circuit annulled the SEC rule that allowed brokers to have such fee-based arrangements in the first place. That rule, popularly known as the “Merrill Lynch rule,” but officially called “Certain Broker Dealers Not Deemed to be Investment Advisers,” was created by the SEC in 1999 to exempt—and thus protect—brokers who offered a fee-based compensation arrangement to brokerage clients from being regulated under the Investment Advisers Act of 1940. (Get some coffee and read the now annulled rule here if you like).

Five years later, the SEC found itself in Court, as the Financial Planning Association sued the regulator in July 2004 saying it had overstepped its bounds when it proposed the rule providing special exemptions for broker-dealers when a very clear and narrow exemption already existed in the 1940 Act. (In penning the IA Act of 1940 Congress had provided an exemption for broker-dealers from regulatory liability but only if they met two restrictions: the broker couldn’t receive ‘special compensation’ and any advice he provided had to be ‘solely incidental to the conduct of his business as a broker-dealer.’ The Act also gave the SEC the power to exempt ‘other persons’ that fell outside of law’s exemptions.)

In siding with the FPA, the Court ruled the SEC had indeed exceeded its authority by providing exemptions for broker-dealers that charge asset-based fees from regulation under the IA Act. Those fees, said judge Rogers in her ruling, qualify as ‘special compensation.’ Additionally, the SEC’s attempt to categorize broker-dealers as the ‘other persons’ mentioned in the Act for the purposes of the exemption is not acceptable and “flouts six decades of consistent SEC understanding of its authority,” according to the ruling. In other words, the Court found that “the SEC gave no good reason for reversing sixty years of prior consistent interpretation of the Act,” says Merrill Hirsh, FPA’s attorney in the matter.

So what does this new reality mean for reps and investment advisers? Well, that’s tough to say for sure at this point. The SEC has yet to decide what it wants to do. It can seek a rehearing or review by the Supreme Court, but neither of these things is likely to be granted, according to Hirsh. If the SEC does nothing it will eventually be required to enforce the new reality, in which case advisors better get their Series 65 and start boning up on what it means to act as a fiduciary for their clients.

One Raymond James financial advisor who has both his Series 7 and Series 65 licenses says he already serves a fiduciary for those clients whose money he manages on a discretionary basis. But he doesn’t see his firm or the large wirehouses letting all their reps act as fiduciaries: “I’ve been at this for 20 years but I can’t see 10,000 guys running my type of operation; there’s too much liability for the firms,” he says. None of the firms contacted for this story would comment on their plans at this stage.

But while no one’s saying how exactly things will be different, something will have to change if the ruling stands. “Assuming this sticks, from the date it takes effect [which can’t be determined at this point], there will be $250 billion of advisory accounts that violate the Advisers Act,” says Mercer Bullard, founder and president of Fund Democracy, a non-profit mutual fund shareholder advocacy group, who also wrote a “friend of the court” brief in support of the FPA’s position.

In the end, is it such a bad thing that registered reps—who nearly universally see themselves as financial advisors and not brokers—might finally be able to legitimately call themselves advisors? “It’s definitely going to increase the competition,” says Ron Rhoades, an investment advisor and fiduciary with Joseph Capital Management, and another frequent critic of the now annulled rule. “It will be harder for me to distinguish my services vs. a rep touting fee-based accounts,” he says, because both will be held to the fiduciary standard. And that’s good—for investors. “That more people will be subject to fiduciary duty is a great development for [consumers]; it will lessen the confusion,” he says.

Merril Hirsh puts it another way: “It hasn’t been good for brokers to be in this situation where its like they can provide investment advice but only while standing on their left foot on Tuesday,” he says. “I hope this helps change that.”