The Financial Planning Coalition, a group that includes several organizations representing thousands of financial advisors, this week released a copy of a petition it sent to the Securities and Exchange Commission, asking the regulatory agency to extend the definition of fiduciary standard to include “anyone providing personalized investment advice to retail clients.”

During a press conference Thursday, Marilyn Mohrman-Gillis of the Certified Financial Planner Board of Standards claimed that there is “really broad support” for the proposed expansion of the of the fiduciary standard, but she added that opposition has come from “insurance companies and especially NAIFA,” a reference to the National Association of Insurance and Financial Advisors.

The SEC is currently considering a measure that, if adopted, would expand the fiduciary standard to all broker-dealers, stockbrokers and insurance agents, regardless of how they are compensated, requiring that all those who provide any kind of financial advice to individuals place the interests of the client first.

The FPC petition, which was signed by more than 5,200 financial advisors, claims that most consumers simply -- and wrongly -- assume, that the people giving them financial advice to buy an investment product, insurance policy or annuity, are putting their interests first. That's not always the case.

As the petition states:

“Most consumers assume their financial services providers are already required to provide advice that is in their best interest. Unfortunately, this is not the case. As a financial service provider, I can choose to operate under different regulatory structures, each with different standards and requirements for how I treat my clients. Some require me to put my clients’ financial interests ahead of my own, some do not. But there is no easy way for consumers to distinguish.”

NAIFA, in its own comment letter to the SEC, has opposed such an expansion of the fiduciary standard, claiming that the “suitability standard” to which fee-based brokers and agents currently must adhere provides adequate consumer protection.

Gary Sanders, NAIFA vice president of securities and government relations, says his association believes, along with the two Republican members of the five-member SEC board, that “more study is needed on the impact of expanding the fiduciary standard on the affordability of financial services to mid-market consumers.” 

He said NAIFA also disputes claims that the so-called “suitability standard” currently applied to fee-based brokers and agents is “any weaker than a fiduciary standard.”

Daniel Barry of the Financial Planning Association, another member organization in the Financial Planning Coalition, said the decision to send the petition to the SEC was based on the coalition’s belief that with the one-year anniversary of passage of the Dodd-Frank Act fast approaching, the SEC will be soon taking action on the fiduciary expansion regulation.