(Dow Jones) Stockbrokers and investment advisors are nervous about looming changes to rules that shape how they give advice to their customers.

The Securities and Exchange Commission this month began a highly controversial effort to come up with a single standard of care to protect retail investors whether they get advice from a broker or an investment advisor.

The SEC is expected to propose the common fiduciary standard soon after it completes a six-month study on the matter on January 21. The SEC invited the public to comment on its study late last month and has already been flooded with hundreds of letters.

The new financial-regulatory law authorizes the SEC to create a common fiduciary duty for both sets of professionals that is at least as tough as the one that applies to advisors.

The trouble is the fiduciary standard for advisors has never been written into law. Rather, the concept of fiduciary duty has been articulated to varying degrees by the courts, including the U.S. Supreme Court, and in settlements of SEC enforcement actions.

A fiduciary duty, depending on how the SEC defines it, could revolutionize the way brokers market products and services by requiring them to disclose conflicts of interests. For example, brokers could now be required to tell their customers that they receive bigger commissions for selling certain higher-fee mutual funds.

Advisors, meanwhile, worry that they will get hit with new obligations when the SEC drafts the new common standard.

"Why do you need another fiduciary standard?," Investment Adviser Association Executive Director David Tittsworth said. "We have a federal fiduciary standard. It's been in existence for 50 years and it's been consistently approved by the courts."

The SEC has stumbled in this area before. It adopted in the mid-2000s a rule that allowed brokers to escape being classified as advisors even when charging fees based on assets under management-the typical arrangement for an advisory account. The financial planner community sued over the rule and won.

Developing the new standard will be one of the SEC's toughest tasks in the wake of the new financial law, argued Barry P. Barbash, a former director of the SEC's investment-management division. "As a practical matter, it's going to be hard for the SEC to put into writing what it means to be a fiduciary," said Barbash, who is now with law firm Willkie Farr & Gallagher LLP in Washington.

Brokers who work for insurance companies have united against the proposal. They claim that a fiduciary duty is vaguely defined and won't protect investors any better than brokers' suitability requirement. The National Association of Insurance and Financial Advisers sent an email alert to its members urging them to rally against the proposal.

Meanwhile, the Securities Industry and Financial Markets Association, or Sifma, a trade group representing several large and mid-sized brokerages, last year endorsed adopting a fiduciary standard after years of opposing it. The group is worried, however, that the SEC could write the standard in a way that upends brokers' business model.

Brokers want to make sure they don't have to act as fiduciaries for accounts where the customer makes the final call on any investment choices and is paying commissions rather than asset-based fees-even though brokers may be weighing in on investment decisions.

"Our concern is that the federal fiduciary standard of care be written in a way that preserves investor choice and investor access to a broad range of products and services," RBC Wealth Management Chief Executive John Taft, a Sifma member, said.

Investment advisors, who for years have pushed to impose a fiduciary standard on brokers, agree that brokers don't need to act as fiduciaries at all times.

The fight is over whether the standard should be rooted in broad principles-such as those mandating that professionals avoid conflicts and don't mislead their clients-or in clearly defined rules.

The brokerage industry, which operates under rules enforced by the Financial Industry Regulatory Authority, or Finra, fears switching to a principles-based standard, which it considers vague. Investment advisors and consumer advocates argue that a fiduciary standard based on rules would water down investor protections.

"They are trying to turn the fiduciary duty into a re-named suitability requirement," argued Barbara Roper, director of investor protection at the Consumer Federation of America. "If the SEC went with that approach, it would trash the opportunity we have here."

Brokers lobbied successfully for language in the new financial law that would put boundaries on any fiduciary standard adopted by the SEC.

The fiduciary standard can't prevent brokers from charging commissions or offering a limited menu of investment choices. Also, the standard can't extend beyond the provision of investment advice or the recommendation of securities.

Consumer advocates worry that this last requirement will allow brokers to escape the fiduciary duty as soon as they implement their investment advice.

Roper said advocates were prepared to sue the SEC if it adopts a standard that they believe is weaker than the one already in force for advisors.

State regulators, too, are ready to pounce if the SEC takes a rules-based approach.

"It is very difficult to reduce down to rules what is the appropriate advice in any given circumstance," North American Securities Administrators Association President Denise Voight Crawford said.

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