NEW YORK (Reuters) - The U.S. Securities and Exchange Commission on Wednesday proposed a new rule that would require brokers at firms like Morgan Stanley MS.N and Merrill Lynch Wealth Management to clearly explain the fees investors pay and commissions brokers earn when giving financial advice.

FILE PHOTO: The U.S. Securities and Exchange Commission logo adorns an office door at the SEC headquarters in Washington, June 24, 2011. REUTERS/Jonathan Ernst

The 1,000-page Regulation Best Interest would require brokerages to put that information, along with any conflicts of interest and questions clients should ask, in a four-page disclosure document that brokers would be required to give investors.

The rule comes after more than a decade of regulatory deliberation over how to address conflicts of interest in the investment advice industry.

If passed, it would replace the Obama-era fiduciary rule, which was issued by the Labor Department and was overturned in March by the 5th U.S. Circuit Court of Appeals.

SEC Chairman Jay Clayton said the rule “reflects our efforts to fill the gaps between investor expectations and legal requirements, thereby increasing investor protection and the quality of advice, while preserving access and choice, recognizing that ... (is) driven by what is available and how much it costs.”

The rule proposes that brokers “act in the best interest of that customer at the time the recommendation is made, without placing the financial or other interest of the (firm) ahead of the interest of the retail customer.”

Commissioner Kara Stein was critical of the proposed rule and voted that it not be opened up for the 90-day public comment period because, she said, it does not set hard lines defining what is in a client’s best interest and will add to confusion.

The Financial Industry Regulatory Authority, which also governs brokerages, already requires the 3,800 firms follow a best interest standard, which could lead to different interpretations by it and the SEC, she said.

“I am concerned that this rule will not only confuse retail investors, but also brokerages,” Stein said.

The rule includes a provision barring brokers from calling themselves investment advisors or advisers, a formal title that comes with additional disclosure and registration requirements and which brokers sometimes use casually.

Stein said that if the SEC was going to say who can be called an advisor or adviser, then it should be “logically consistent” and define the best interest standard.

The SEC did not provide an estimate of what it would cost firms to comply with the rule.