A kind reader sent me an e-mail recently that set off more alarm bells than Southern California in fire season.

It wasn't her question about college finances that worried me but why she hadn't run it by a financial planner.

"We do have a planner," the reader wrote, "but I have to say she hasn't really advised us in the area of long-term planning, just suggested and invested in mutual funds."

Any financial planner worth her salt should help clients prepare for watershed financial moments, not just pick funds.

This underscored how we don't think enough about the conflicts of interest the people who manage our money might have. A 2006 RAND Corp. study found most people don't understand key differences between broker-dealers and financial advisers. As Bernie Madoff showed us, even the highfalutin don't give it as much thought as they should. (Get more help picking a money manager or planner here and weigh in on our poll).

President Barack Obama does. As part of his financial industry overhaul announced this month, Obama wants to require that stockbrokers and dealers put the client's interest ahead of their own.

No more pushing products or making trades at the expense of their customers' pocketbook or well being. They would have to abide by the same "fiduciary" standard that the U.S. Securities and Exchange Commission holds financial advisers and planners to.

This change is long overdue, especially since the differences between those professions have blurred in the public's mind. The Securities Industry and Financial Markets Association spokespeople say the trade organization is still forming its position. You can be sure, however, it will fight this.

It used to be that the lines between the titles were clear. Brokers bought and sold securities for others. Dealers bought and sold securities for their own accounts. Investment advisers recommended securities. Financial planners charted futures and (most) advised as well.

Anyone can call himself a financial planner. And over the last two decades, anyone has. Broker-dealers have become "planners." So have bankers. They're going to do even more "planning" in the future.

Be warned. If an adviser or planner doesn't have an RIA or CFP next to their name, they don't abide by the stricter fiduciary standard.

An RIA, Registered Investment Adviser, must register with state securities regulators. Or with the SEC, if they manage more than $25 million in assets.

A CFP, or Certified Financial Planner, must pass a tough exam and chalk up three years' experience to claim the designation. If they manage assets, they also must register with authorities. Even if they're only providing advice, they must come under state supervision, said John Carr, a Lake Oswego attorney who represents advisers and planners.

These pros live with the following prescript as they manage someone's finances: "You can personally be liable for an innocent, negligent mistake," Carr said.

Broker-dealers don't. They're self-regulated by the Financial Industry Regulatory Authority, not the SEC. They're held to a less rigorous "suitability" standard -- buying and selling only what is suitable for their client's financial status and needs.

Yet, "suitability doesn't mean cheapest," noted Tamar Frankel, a professor of securities law at Boston University. "It doesn't mean for my benefit." A broker-dealer can invest someone's money in a fund that earns them a commission over a competing fund with lower expenses and fees, without really spelling out the differences to the client.

What's more, clients cannot take broker-dealers to court over bad advice. Mandatory arbitration agreements force broker-dealer disputes before an arbitrator, who may have been a former broker-dealer himself. The Obama administration also plans to review the fairness of this arrangement.

There are ethical brokers out there, I'm sure. There are many ethical investment advisers who disclose commissions up front and who deposit clients' money with a separate custodian -- something Madoff did not do.

I'm partial to fee-only advisers and planners. They get paid either by the hour, the service they provide, on retainer or by a percentage of the assets they manage -- or some combination of those methods. They most often are members of the National Association of Personal Financial Advisors, which promotes their fiduciary duties.

Even they have potential conflicts. If you want to liquidate some of your investment holdings to pay off your house, their revenue goes down. Others charge by the hour or service, so they theoretically could drum up work to boost revenue.

"There are always going to be conflicts of interest." said Susan MacMichael John, a CFP and NAPFA board member.

The best thing you can do is be aware of them. Ask your prospective money manager to go over any potential conflicts and pay arrangements before you hire them. Ask them, too, if they'll warn you when a conflict arises in the future, before you make any investment decision.

You can also push Washington to adopt Obama's proposed changes. Sen. Jeff Merkley, D-Ore., sits on the chamber's Banking, Housing and Urban Affairs Committee.

Or, pay a planner or adviser for just that --planning and advice. But manage your money yourself.

Then you'll have only yourself to blame.

And any columnist you choose to heed.

Brent Hunsberger does not give individual financial advice but welcomes questions and comments about his column or blog. Reach him at 503-221-8359 or brenthunsberger@news.oregonian.com.

