It seems like the debate over a fiduciary standard of care has been one of the financial advisor industry's most nettlesome issues for eons. Who should it apply to? How do we craft a uniform standard of care that pleases all sides? And, fundamentally speaking, what exactly does "fiduciary" mean?

Of late, the debate has been reduced to a "best interests" issue between investment advisors who are governed by a fiduciary standard of care that places their clients' interests first and broker-dealers who aren't governed by a fiduciary standard and thus, by implication, aren't perceived as required to put their clients' interests first. The latter camp is miffed by that perception, arguing that their advisors often act as fiduciaries even if they're not formally held to that standard.

But according to a new survey of 500 registered investment advisors, investment advisory representatives and registered reps, many advisors of all stripes aren't as fiduciary as they think they are. The study is a partnership between Financial Advisor magazine, Boston Research Group and 3ethos, a Mystic, Conn.-based entity dedicated to fiduciary training that's run by Don Trone, a longtime leader in promulgating fiduciary standards within the industry.

The survey graded advisors based on questions dealing with fiduciary best practices, along with additional questions focused on legal and procedural aspects related to fiduciary services.

The answers were tabulated on a fiduciary best practices index, and were assigned scores and accompanying letter grades ranging from "A" to "F." The average, industrywide index score among all respondents was 76, or a "C" letter grade. The mean score was 78, or a "C+" grade.

Among the questions respondents were asked was whether they acknowledged fiduciary responsibility in writing. Of the advisors who say they acknowledge a fiduciary status for all clients, 35% got a "C" or less for their overall fiduciary index grade. Of the advisors who say they acknowledge fiduciary status for some clients, 68% got a "C" or less. And of the advisors (brokers) who say they do not acknowledge fiduciary status, 90% got a "C" or less.

"There's a disconnect between principles and practices," says Trone, noting the survey reveals that a number of advisors believe they're acting in principle to a fiduciary standard but in reality don't understand the practices.

The survey divided respondents by registration status and graded each of the four different groups. RIAs regulated by the Securities and Exchange Commission collectively scored an 83 on the index, or a "B" grade, while RIAs regulated by the states had a 79 score and a "C+" grade. Dually registered IARs scored 75 with a "C" grade, while registered reps scored 66 and earned a "D."

"I'm a 25-year veteran of the fiduciary movement, and after the work I've done with the financial advisor industry I thought that we were further along [on the fiduciary issue]," Trone says.

This is the first annual survey on fiduciary matters conducted by the three partner entities. The purpose of the survey is to benchmark how well advisors understand fiduciary principles and adhere to fiduciary practices and how that can impact their business. With that information in hand, future surveys will measure the rate of adoption of best practices.