The New Rules on Investment Accounts

My broker says I have to close my one-fee-does-it-all account. What's up?

You're among the million or so investors who will likely be hearing from their brokers soon as a result of recent regulatory changes. Brokers will no longer get a pass on the rule that requires anyone who gives advice for a fee -- even just stock tips -- to be registered as an investment adviser. That designation legally binds them to put their customers' interests ahead of all else.

Before, brokers who offered fee-based accounts needed only to ensure that securities were "suitable" for clients -- a lesser standard that is still in force for brokers paid in commissions. At stake is $281 billion in fee-based brokerage accounts, also called wrap accounts. The average account is worth $279,000 and is paid for by a percentage of assets under management rather than commissions.

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Most likely you'll have to choose between transferring your money to an account with full advisory services (assuming your broker offers one) or a commission-only account. You could pay $200 a year more than you do now to go the full-advice route, according to consultant Cerulli Associates, so make sure you need the extra attention.

If you choose to pay commissions instead, you may also end up shelling out more money, according to industry calculations. You'll want to monitor trading to make sure it's no more frequent than was the case in your wrap account.

Anne Kates Smith brings Wall Street to Main Street, with decades of experience covering investments and personal finance for real people trying to navigate fast-changing markets, preserve financial security or plan for the future. She oversees the magazine's investing coverage, authors Kiplinger’s biannual stock-market outlooks and writes the "Your Mind and Your Money" column, a take on behavioral finance and how investors can get out of their own way. Smith began her journalism career as a writer and columnist for USA Today. Prior to joining Kiplinger, she was a senior editor at U.S. News & World Report and a contributing columnist for TheStreet. Smith is a graduate of St. John's College in Annapolis, Md., the third-oldest college in America.