Six investment advisor groups launched a campaign asking advisors to tell the Securities and Exchange Commission its proposed customer relationship summaries will confuse investors rather than illuminating critical legal and regulatory differences between advisors and brokers.

Billed as a time-urgent “Raise Your Voice” campaign, the initiative asks advisors to respond to the SEC’s August 7 deadline on the proposed customer relationship summaries, by outlining their fiduciary practices and principles in. Advisors are required, as fiduciaries, to put their clients interests first. In contrast, brokers, who often charge fees for advisory accounts the same as advisors, are currently held to a fiduciary standard when they oversee advisory accounts.

“The proposed rules depict broker and advisers as essentially the same, like identical twins, but without identical investor protections,” said Knut Rostad, president of the Institute for the Fiduciary Standard, who is spearheading the campaign. “The legal, contractual, business and cultural differences dividing brokers and advisers are important and must be clearly stated and explained.”

The SEC summaries (there will be one for brokers, advisors and dually-registered brokers) are supposed to outline for investors the differences between financial professionals, including conflicts of interest, business practices and hidden fees and commissions. Unfortunately, they fall short of this mark because they make advisors and brokers sound identical, the advisor groups said. Conflicted advice costs investors some $70 billion annually, according to the General Accounting Office.

Critics of the proposal say calling the proposal a “best interest” regulation, which the SEC fails to define in the proposal, will sound more attractive to customers without requiring brokers to put investors’ best interests first at all times.

“We submit that it’s contradictory. Everyone sounds like everyone else, but brokers are getting an exception and we play by a fiduciary rule,” said Patti Houlihan, chairman of the Committee for the Fiduciary Standard.

“The worst that can happen is the SEC makes brokers look like they are fiduciaries with a best interest standard that isn’t even defined,” said Houlihan. “The way the SEC proposal reads now, it says to consumers: ‘The legal people [fiduciaries] are over here and they cost more and are more complex, but here’s the down-to-earth best-interest folks [brokers] who have your back.’ I’m very worried about how this is going to turn out,” said Houlihan, who began her career as a broker three decades ago before launching her fee-only advisory firm Houlihan Financial Resource Group outside Washington, DC.

The fiduciary advisors’ campaign includes a ready-to-use flyer and a social media post that urges “Advisors Act Now: Tell the SEC You’re Different."

The flyer, which depicts three people on a park bench, reads: “Brokers are paid commissions to make sales to distribute issuers’ securities to investors. Their advice is “incidental.” Brokers are in a relationship of three. You’re different. By law, you’re a fiduciary. You must be loyal and always put clients first. You have no hidden partners. You’re in a relationship of two. Advisers: act today! The SEC is writing new rules about what advisers and brokers do. Speak out. Urge the SEC to explain that advisers are in relationships of two and brokers are in relationships of three.”

The initiative also provides bullet points advisors can use in describing their fiduciary practices.

Campaign members include the National Association of Personal Financial Advisors, The Committee for the Fiduciary Standard, Alliance of Comprehensive Planners, Garrett Planning Network and XY Planning Network.

The campaign comes on the heels of a meeting Rostad and Institute board members had with SEC Chairman Jay Clayton earlier in June to press their concerns. Institute board members at the meeting included Vanguard Founder Jack Bogle and Phyllis Borzi, former assistant secretary at the US Department of Labor and author of the now-defunct DOL fiduciary rule.

Bogle, who joined the meeting by telephone, told Clayton that investors need a “fair shake” when it comes to understanding who they’re working with and what they’re paying. That fair shake should include the harmonization of a fiduciary sales standard for brokers and advisors, who have become much more alike as significant numbers of brokers migrate from their transaction-based commission model for a more profitable fee-based advice model.

Bogle, whose fund company invests some $5 trillion investor dollars today, told Clayton that he can not let pressure from “those with vested interest in protecting their present business model” supersede investor interests. “Rather than merely requiring disclosure of conflicts, brokers and advisors should provide a mandatory compliance form showing the professionals’ income from all relevant sources. Investors don’t need more fine print, they need hard data and they need a fair shake,” said Bogle, according to a written version of his remarks.

The proposed customer relationship summaries dovetail with the SEC’s “Regulation Best Interest” proposal, which while designed to elevate the responsibilities brokers owe customers,  stops short of harmonization or the establishment of a fiduciary duty for brokers. Currently brokers are regulated by a suitability standard that allows them to sell products and accounts that are, in essence, good enough.

Houlihan, in her advisory capacity, regularly acts as an advocate for clients and widows who have trusts and other accounts at broker dealers, even going with them to meetings with their brokers.  In one recent meeting, a broker was so “slick” in describing an alternative investment as “like a mutual fund” and downplaying the 2 percent front-end commission and 4 percent back-end commission he’d earn that the client left the meeting saying: “See, he didn’t fee me,” Houlihan said. The broker also held the client’s investments inside a fee-based advisory account that paid him 1.25 percent annually, despite failing to offer fiduciary advice or put the client’s best interests first, she said.

Earlier this month she was asked by a CPA to explain a tax client’s unfortunate high-tax situation in retirement, which was triggered by a broker annuitizing all their investable assets. The broker had put 100% of the middle class couple’s retirement plan rollovers and all their inheritance in annuities, so in retirement they are stuck paying regular income tax for every dollar they withdraw. As troubling, they’d been told by the broker they had a spousal annuity for the wife, when none existed, Houlihan said.

So, what’s the big deal?

Houlihan said if a registered investment advisor had done any of these things they would be in violation of their fiduciary duty and could be sued. In contrast, brokers’ clients are required to waive their legal rights to sue and must instead use arbitration to settle even charges of fraud, unsuitable investments, churning and outright theft.