It does not require that they act in the best interests of their clients as registered investment advisors, as fiduciaries must. It only requires that they sell investments that are suitable—not necessarily optimal—for their clients.
The Securities and Exchange Commission and Finra have been moving toward applying a fiduciary standard to all financial advisors. It remains to be seen whether commission-based advisors can live up to it, and whether regulators can effectively ensure that they do. Most fee-only advisors don't think so.
"Commissions don't put financial advisors in the best position to act as a fiduciary," said Tim Maurer, a certified financial planner with Buckingham Asset Management. Maurer, who now works on a fee-only basis with clients, began his career as a commissioned broker at Legg Mason. "I feel that I was always a fiduciary to my clients, but I also feel a lot less conflicted now," he said.
The conflict for brokers is that they make their money on transactions. The more transactions they execute, particularly involving investment products with high commission rates, the more they earn.