SEC Chairman Jay Clayton dismissed concerns over the vagueness of his agency's Regulation Best Interest, saying the proposed rule package clearly outlines a standard for brokers to abide by when advising clients.

"The fundamental duty is going to be that the broker cannot put his or her interests ahead of the clients," Clayton said Dec. 11 during a Senate Banking Committee hearing. "Is there a specific definition saying this is what it means? No, but there's no specific definition that says this is what the investment adviser standard means."

In April, the SEC unveiled a long-awaited plan to create a standard that would require investment advice professionals to act in their clients' best interests. The SEC's proposal, which has not yet been finalized, was also intended to reduce conflicts of interest in the investment advice business and to clarify the differences between brokers and investment advisers.

Currently, brokers and financial advisers operate under a suitability standard, meaning that they are required to guide clients toward certain investments. Investment advisers, on the other hand, have to abide by a stricter fiduciary standard, which makes those advisers legally responsible if they are found to not have acted in the client's best interest.

But the SEC's proposal has come under fire from Democratic lawmakers and consumer advocates, who say its lack of a clear definition of "best interest" will only create more confusion for investors.

"We could have fixed that by just giving everyone the same rule, but we didn't," said Sen. Elizabeth Warren, D-Mass., during the hearing. "We need a clear uniform fiduciary standard for advisers and brokers."

In response, Clayton said that the rule's differences between investment advisers and brokers stems from those professionals' relationships with their clients.

"The principles are the same, and I believe the outcomes under both models should be the same: Retail investors receive advice provided with diligence and care that does not put the financial professional's interests ahead of the investor's interest," Clayton said in his written testimony. "Our proposals are designed to make investors get just that whether they choose a broker/dealer or an investment adviser."

Yet Warren remained skeptical of the need for differences in the proposed rule's language, adding that retail investors will struggle to determine the differences between brokers and investment advisers.

"If it's the same, let me suggest something, Mr. Chairman — just use the same words," she said.