It's crunch time for the fiduciary standard, as Congress on Wednesday starts to tackle the investor protection provision of the financial services reform package. Included in that is whether or not the fiduciary standard of care should apply to everyone in the financial services industry.

Congress is racing to merge competing reform proposals from the House and Senate into a bill for President Obama to sign into law by July 4. As the conference committee on financial regulatory reform begins consideration of the investor protection measures, the biggest unreconciled difference between the two sides centers on the fiduciary standard.

The House bill, passed in December, would require the Securities and Exchange Commission to adopt rules under the Securities Exchange Act to hold brokers, insurance agents and others who provide investment advice to retail customers to the same fiduciary standard as investment advisors under the Investment Advisers Act of 1940. That standard requires them to act in their clients' best interests.

The Senate bill, passed in March, mandates more studies on the issue. Specifically, the SEC would be required to study gaps and regulatory overlaps between brokers and investment advisors.

"It requires the SEC to initiate rule making at the end of that study, but denies the SEC the authority it needs to raise the standard for brokers when they give investment advice," says Barbara Roper, director of investor protection at the Consumer Federation of America.

Roper, joined by groups representing investment advisors, financial planners and state securities regulators, held a conference call on Tuesday making one last pitch for Congress to pass the House version that would impose the fiduciary standard across the advisory industry.

Broker-dealers are regulated under the Securities Exchange Act of 1934 and are held to the suitability standard that requires them to make recommendations that fit a client's risk tolerance, objectives and financial status.

"It [the fiduciary standard] imposes the utmost duty of good faith, full and fair disclosure of all material facts, including potential conflicts of interest," says David Tittsworth, executive director of the Investment Adviser Association.

The brokerage industry claims that imposing the fiduciary standard on them will raise service costs and reduce the amount of investment products available to retail investors.

Speakers at the press conference disagree. "This is simply not true," says Bob Glovsky, chair of the CFP Board of Standards Inc. who spoke for the Financial Planning Coalition, an alliance comprised of the CFP Board, the Financial Planning Association and National Association of Personal Financial Advisors.