SIFMA, FSI and nine other trade groups sent a joint letter to the Nevada Securities Division on Friday asking officials not to apply a fiduciary standard to brokers.

Nevada’s proposed fiduciary regulation is far-reaching and would eliminate exemptions for broker-dealers, investment advisors and sales representatives from the definition of “financial planner.” It also imposes a fiduciary duty on these firms and individuals that would require them to put investors' best interests first. The rule would also give investors the legal right to expect that their advisors have an ongoing fiduciary obligation.

“While many of us have sent separate letters, we thought it was important to highlight some key universal concerns,” the trade groups said in the letter, which was signed by officers of FSI, SIFMA, the American Council of Life Insurers and the Center for Capital Markets Competitiveness at the U.S. Chamber of Commerce.

Friday was the last day for public comment submissions on Nevada’s proposal. Regulators there are likely to have a “workshop” hearing on the proposal before it is finalized, a spokeswoman said.

The trade groups are asking Nevada to wait for the Securities and Exchange Commission to finalize its “Regulation Best Interest,” which raises the bar on broker sales conduct but does not apply a fiduciary standard.

Failing that, “the [Nevada] regulation should not impose an ongoing fiduciary duty on broker-dealers and their agents,” said Ira Hammerman, executive vice president and general counsel of SIFMA.

Nevada’s regulation creates an ongoing fiduciary duty that would, among other things, require the monitoring of the performance of customer accounts.

Also, anyone using the term "advisor" is not entitled to an exemption from fiduciary duty in the Nevada rule.

“While the draft regulations do contain an episodic exemption, the overly broad definition of investment advice and the exclusion for representatives that use certain words in their title mean that the exemption will seldom if ever be used,” the trade groups said.

Nevada’s exemptions to its fiduciary standard are “too narrow,” the groups said.

Nevada’s regulation would also “likely” encourage investment professionals to migrate from brokerage to fee-based accounts and give up their brokerage relationships, said the groups, who represent the interests of broker-dealers, independent brokers, insurance companies, insurance agents and others who would be impacted by the rule.

“The draft regulations impose a presumption that a B-D owes a fiduciary duty and characterize many routine client interactions as triggering such a duty. Dual registrants are also presumed to be acting as an [investment advisor or investment advisor rep] and are subject to a continuous fiduciary duty for which there is no exemption,” the trade groups said.

“These conditions will likely encourage firms to re-evaluate their brokerage services. B-D accounts represent an important, cost-conscious choice for retail investors and provide access to affordable advice, particularly for smaller, buy-and-hold investors. We would encourage you to strike the presumptions for B-Ds and dually registered firms in the draft regulations,” the groups said.

The groups urged Nevada officials to wait for the SEC to adopt a national standard.

“We believe a national standard provides enhanced investor protection, avoids investor confusion and is much easier to administer and operationalize than an uneven patchwork of state laws,” they concluded.