Proponents of the fiduciary standard for all financial advisors will be watching the House-Senate conference committee very closely Wednesday, when the group will begin to consider whether to include the requirement in the financial regulatory reform bill.

The conference committee has two options before it: The House version, which passed in December has language requiring all broker-dealers and insurance agents who give advice to retail investors to adhere to the same fiduciary standard that currently covers investment advisors under the Investment Advisor Act of 1940. They also want brokers to disclose inherent conflicts of interest in the sale of investment products, as well as fees and commissions they charge clients for them. But Senators, who passed their version in May, called for the Securities and Exchange Commission to study the issue for a time, and then adopt rules on the issue.

Brokers currently operate under the suitability standard, which means they just have to ensure that the products they sell their clients are appropriate for their investment goals.

This next phase is especially important for fiduciary standard advocates. The conference process uses the Senate’s version of the bill, which runs over 1,900 pages, as the base text for the final legislation. House members will have to persuade Senators to use the tougher House language—without alienating Senate support needed to make the legislation final. Making matters more urgent, legislators are up against a tight deadline, because President Obama has said he wants a final bill by the July 4 holiday.

These circumstances have set off a forceful push from fiduciary standard advocates, who held a conference call on Tuesday announcing their unified stance on the issue.

“Right now, they get to have their cake and eat it too,” Barbara Roper, director of investor protection for the Consumer Federation of America, said of brokers. “They get to lead their customers to believe they are in a relationship of trust. What we’re trying to do here is put an end to the double standard.”

The broker-dealer community has argued that if they were required to the fiduciary standard, it would impose burdensome costs on their businesses, and restrict consumer access to certain investment products. Advocates rebuffed that argument. 

“There is a cost to regulation, and everybody recognizes that,” said David Tittsworth, executive director of the Investment Adviser Association. “We have been operating under a fiduciary duty for decades. We’re not aware of any fiduciary duty that will bankrupt anyone who is associated with it.” 

Denise Voigt Crawford, president of the North American Securities Administrators Association, an umbrella group that oversees state insurance regulators, and Bob Glovsky, spokesman for the Financial Planning Coalition, were also on the call. The Financial Planning Coalition is made up of the CFP Board of Standards, the Financial Planning Association and the National Association of Personal Financial Advisors.

Although the Senate does appear to have an upper hand in the conference negotiations, advocates say the legislation has several allies in the Senate, namely Charles Schumer (D-N.Y.), and Richard Durbin (D-Ill.).

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