What a rare opportunity! Republicans and Democrats have actually found something that they agree is a problem – and they are committed to doing something about it. And the consensus continues, with federal and state regulators, consumer and industry groups alike agreeing that there's a problem and an immediate need to address it. So what is the problem? The Securities and Exchange Commission (SEC) doesn't examine investment advisers often enough. With exams conducted on average of once every 11 years and with the memories of Bernie Madoff and Allen Stanford fresh, it is easy to see how this unusual consensus has emerged.

Yet we find ourselves on the verge of squandering this opportunity to genuinely and demonstrably improve investor protection and this should rightly anger investors.

There is a simple solution, of course. More resources need to be allocated to the SEC's examination program, which can be accomplished at no cost to taxpayers. With Congressional authorization, the SEC could get what it needs to improve oversight through a very small increase in their transaction fees, which would mean an equitable spreading of costs with high volume, high frequency traders bearing their proportional share.

But Republicans are reluctant given the SEC's track record. Many of them see an agency in need of extensive reform – and one that has not been effectively using the funds it has been given. Regardless, even the skeptics recognize the problem and getting badly needed resources into the SEC's adviser oversight program should be achievable – whether through increased funding, reallocation of SEC resources, or a combination of the two – with appropriate accountability.

So why is such a heated debate occurring?

The answer is that some are looking to exploit the obvious problem and rare political consensus to score points in the ongoing battle between broker-dealers and investment advisers. Unfortunately, it comes at the investors' expense with all signs pointing to a protracted conflict with no improvement in adviser oversight on the horizon.

The broker-dealer lobbying group Financial Services Institute (FSI) has been aggressively leading the charge to impose a new self-regulatory structure on investment advisers and they have specifically been touting the Financial Industry Regulatory Authority (FINRA) as the answer. A recent message from FSI’s chairman Joe Russo is both enlightening and disturbing as he espouses investor protection while being relatively transparent about his and FSI’s true motives.

To justify FSI's advocacy for a bill that will burden the adviser businesses of its members (and others) with high costs and a new layer of oversight, Mr. Russo cites "political reality." The problem is FSI's reality is false. Russo explains that “everyone in D.C. knows that this Congress is never, ever, going to give the SEC more money.” (Emphasis added.) Really? Congress has increased the SEC’s budget in 16 of the last 18 years, which doesn’t exactly gel with “never ever”.

FSI's unique take on reality doesn't stop there as it cites the "endorsement" of an SRO by SEC Chairman Mary Schapiro and insinuates that the Consumer Federation of America (CFA) also supports its position.

The truth is that their statements were not an endorsement of the Investment Adviser Oversight Act of 2012, which FSI is pushing. Chairman Schapiro's remarks and CFA's position can more fairly be read as a simple desire to improve oversight.

In fact, what is driving FSI and others is pure competition. They claim investment advisers have an “unfair competitive advantage.” It is a specious argument since their assumption is that brokers and advisers are essentially providing the same services and therefore should have the same oversight. Nonsense. First of all, investment advisers are not selling securities. To the extent they wish to do so, they would have to register as a broker-dealer and be subject to the full panoply of sales regulation and the same exact oversight as other broker-dealers. In other words, they have no competitive advantage.

In contrast, broker-dealers have been providing investment advice for years without being subject to investment adviser regulation and standards of care. They can do this legally if their advice is “solely incidental” to sales activity.

So another reality check for FSI: it’s the broker-dealers that actually enjoy a competitive advantage by providing advice without being subject to the same laws and regulations that apply to investment advisers.

Now, we could go ten rounds over the broker-dealer, investment adviser regulation issue and it is likely a battle that will be fought for years to come. The issue needs to be resolved, but the Investment Adviser Oversight Act is more likely to complicate it than resolve it. We should put it aside for the moment and focus on what is most important: what is “fair” for investors. We have a unique opportunity to truly improve investor protection and to do so in a quick, cost-effective way without creating a new regulator and unfairly burdening small advisers.

The sad reality is that the opportunity will likely be squandered because of parochial interests.