(Dow Jones) In Washington, almost anything will fly if you can make an argument it will benefit the middle class.

It worked for the National Association of Insurance and Financial Advisors, which fought a recent proposal that would have made all financial advisors act in clients' best interests.

While that sounds like common sense, NAIFA President Thomas Currey argued requiring advisors to put clients in better investments would mean "many middle-class families will be priced out of the financial security process--or scared off from even trying."

This argument carried more weight than you'd think. A plan to enact the tougher standard disappeared from Sen. Christopher Dodd's (D-Conn.) bank reform bill last month and appears unlikely to return soon.

The insurance group's claim has a kernel of truth. Insurance advisors' clients do tend to be slightly less wealthy than those of large Wall Street brokerage firms. About one-fifth have $250,000 or less to invest, making them too small to attract Wall Street's attention, according to Cerulli Inc. (Never mind that four-fifths do have that much money.)

But insurance advisors aren't the only option for the merely moderately wealthy, and they're not the cheapest one either. Besides alternatives such as target-date funds, which involve no advisor at all, take a look at the cost of hiring an advisor by the hour. Rates for these advisors--who are already required to recommend the best available investment--vary, but the average is widely thought be $150 to $300.

At that cost, a typical 10-hour financial plan would run $1,500 to $3,000, no matter how much money you have. For an investor with $200,000, it translates to a fee of about 1.5%. Of course, up-front costs aren't all. This type of financial advisor, by acting directly in their clients' interest, is far more likely to recommend a low-cost index mutual fund, the type of holding often endorsed for mom and pop by financial experts ranging from Morningstar Inc. to Yale endowment manager David Swensen.

The ongoing cost of the Vanguard 500 Index Fund for an account that size is 0.09%. (The advisor would likely mix in some bond funds, but overlook that for simplicity's sake.) While this investor may buy more hours of financial advice in future years, the ongoing cost of this arrangement is otherwise minimal, about $177 a year, based on the initial amount.

Now look at what an investor is likely to pay when they get financial advice through an insurance advisor, where commissions take the place of an hourly rate. An investor with $200,000 would probably be shepherded into a load mutual fund or a variable annuity. Again for simplicity's sake, let's look at a load mutual fund. Variable annuities, whatever their merits, should be more costly anyway because they add an insurance component to the package.

The "A" share class of the Growth Fund of America, one of the most popular load mutual funds, charges investors with $200,000 an up-front sales charge of 3.5%, or $7,000. But the fund also has higher ongoing fees to compensate the fund and the advisor. These are 0.76% of the value of the investment, or $1,467 a year, in our case.

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