LAWYERS and doctors are legally obliged to act in their clients’ best interests and now stockbrokers will have to as well. With this seemingly unobjectionable goal, Thomas Perez, America’s secretary of labour, this week unveiled a proposal to strengthen the responsibilities of those helping Americans save for retirement. In the process, it would give the Department of Labour a role overseeing the $8 trillion Americans have stashed in “individual retirement accounts” (IRAs), in addition to its current supervision of the $5 trillion held in retirement schemes sponsored by companies, known as 401(k)s.

The new rule would replace stockbrokers’ current obligation to ensure that the investments their clients make are “suitable” with, as Barack Obama put it in February, “a very simple principle: you want to give financial advice, you’ve got to put your client’s interest first.” The problem is that many are paid commissions by the asset managers they recommend and thus have conflicts of interest; what is best for them is not always best for clients.

One study sent “mystery shoppers” to advisers who were paid such commissions; even when the shoppers had portfolios of low-cost index trackers (which most academics would recommend), they were advised to switch into funds that levy higher fees. Because 401(k)s tend to have lower fees than IRAs, a saver who shifts their money from one to the other may lose as much as 12% of it (and so will receive 12% less a year in retirement).

According to the government, poor advice of this sort costs Americans $17 billion a year. The proposed regulations, officials say, will give savers “peace of mind”. They will increase earnings on retirement savings by a percentage point, while costing brokers and other investment advisers only $2.4 billion-5.7 billion, the Department of Labour reckons. (The cost for asset managers has yet to be calculated.)

But codifying a “fiduciary rule” is not as easy as Messrs Obama and Perez make it sound. The debate about how to define an adviser’s responsibilities dates back centuries and the Department of Labour and the Securities and Exchange Commission, America’s most prominent financial regulator, among others, use different definitions. The rule as proposed is 120 pages long and includes enough “carve-outs” and caveats to give lawyers and lobbyists plenty to work with. There are exclusions for “order-taking” and “educational material”, which may sound benign but could in clever hands be used for unscrupulous marketing. A further 114 pages are needed to explain how customers can be charged. Commissions from asset-managers are not ruled out, but must be disclosed.

In general, however, the report marks a shift away from a reliance on disclosure as a cure for conflicts of interest to a more elaborate standard. “Disclosure alone has proven ineffective to mitigate conflict in advice,” states the report on the rule’s impact. “Even if they understand the scope of the advisers’ conflicts, many consumers are not financial experts and therefore cannot distinguish good advice or investment from bad.” Research shows that few investors read the small print of disclosures, viewing it as meaningless jargon.

It is not clear, however, that the proposed rule would leave consumers in safer hands. The Department of Labour already requires 401(k) plans to be run on a fiduciary basis, with companies appointing managers to a committee that selects investment providers and, within limits, the investment schemes offered. But that has not eliminated conflicts of interest: the committee may, for example, choose an investment provider which just happens to charge minimal fees to the company for administration and record keeping and recoups the costs from employees who pay higher fees for investments than they could arrange for themselves.

Nonetheless, the administration seems determined. It attempted to tighten standards for investment advice once before, in 2010, before retreating in the face of hostility from the financial industry. Retiring, however, did not seem to suit it.