The CEO of the Investment Company Institute suggested yesterday that the providers of financial advice should act in the best interests of clients. The scary thing is: People were surprised.

Investment News reported the story:

"In what might come as a surprise to the organization's members," it wrote, "the head of the mutual fund industry's biggest trade group last week said that he supports the idea of requiring all financial advisers to act as fiduciaries." [Emphasis added.]

Specifically, ICI CEO Paul Schott said that the fiduciary standard "provide(s) a higher standard of responsibility and accountability." He added: "Isn't that something that all of our recent experience suggests is important?"

Umm ... well .... Yes.

And yet—and this tells you a lot about the bizarro-land in which the ICI and much of the mutual fund industry has operated for the past 50 years—the ICI doesn't actually support what Schott is saying. Instead, its most recent regulatory proposal argues for maintaining the status quo.

For those of you who aren't familiar with this debate, let's review.

There are two groups of people who offer financial advice: registered investment advisors (RIAs) and registered reps. RIAs have a fiduciary duty to their clients, which means they must act in the best interests of clients. Registered reps have no such duty: the only requirement is that they recommend "suitable" investments.

Think about that for a minute. A registered rep can put their own interests (or the interests of their firm) ahead of the interests of the client. That's absurd, and it explains why a lot of high-load, high-cost mutual funds have been pushed down the throats of the investing public over the years.

There are a lot of good registered reps out there: smart people with great ethics who do good work for clients. But come on: This shouldn't be a tough question! Finance is a serious business. You're talking about people's lives, their retirement, their children's education.

Ask yourself: Should providers of financial advice be required to act in the best interests of clients?

The only possible answer is yes.