Broker-dealers can offer financial advice that isn't in the best interest of their clients, and the insurance industry wants to keep it that way.

Though brokers technically only provide "incidental" advice, in practice their recommendations are given the same weight as financial advisers, which are regulated by the Securities and Exchange Commission and held to higher standards. These standards include conflict of interest, full and fair disclosures, and other provisions aimed to protect the client.

"It's absolutely critical that fiduciary standards are extended to all those who give advice, including broker-dealers," said Blaine Aikin, president of fi360 and a member of the Committee for the Fiduciary Standard. He said the industry needs to adopt "professionalization" of advice by having comparable principals used by other trusted professions such as medicine and law.

"The profession is tainted by uncertainty," Aikin said. "Today we have advice being given by some who are held to a fiduciary standard, and those who are not, and there's confusion in investors' mind as to what it means to be a fiduciary and what isn't."

Holding broker-dealers to the same standards as financial advisers would directly impact their behavior and their products available for distribution, he said.

That apparently is the problem. Financial regulatory reform on a whole has been marred by powerful industry lobbying efforts coupled with ideological gridlock. Yet it was only recently that this measure appeared threatened.

At least publicly, the financial industry across the board supports holding broker-dealers to the same standards as financial advisers. Instead, a major impeding factor, Aikin said, is the insurance lobby. "I believe their attitude is that 'we're next' if this is extended to broker-dealers, because they give advice but are not held to a fiduciary standard," he said.

The impediment has come in the form of an amendment being shopped around by Sen. Tim Johnson, D-S.D., which would require a year and a half long study into the affects such a measure would have on the industry. The amendment though would have the effect of delaying and potentially undermining any provision at all.

"We don't need a study to determine what's in the client's best interests or not," Aikin said.

Even so, segments of the financial community have started to factor in the costs and liabilities that will come with the inclusion of fiduciary standards. These costs will come in the form of increased scrutiny over what kind of products brokers offer clients, their reasons for doing so, not to mention their price.

Despite the problems, Aikin sees some silver linings.

"Within the regulatory community there is a growing recognition that transparency has to be greater, more accurate and comprehensive," he said. "There will be more pressure on non-fiduciary segments of the business because those who work with standards will have competitive standards."

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