The staunchest opposition to a universal fiduciary standard that would put clients' interests first isn't from securities brokers, it's from insurance agents.

At least that's what comments to the Securities and Exchange Commission show.

In January the SEC is slated to submit a report to Congress on investor protection with the option to create a universal standard as part of the financial services overhaul bill that became law July 21.

The rule would apply to anyone who gives retail investment advice, including insurance agents dually registered as brokers.

The agency requested comments on the effectiveness of the current standards and received about 2,700 responses, including 426 form letters, which is "a robust response," according to John Nester, a spokesman for the SEC.

Almost 240 form letters were from people in the insurance industry, who are opposed to the standard, whereas some responses from brokers were conditionally supportive.

Comments were due Aug. 30 and will be considered by the SEC as it prepares its report, Nester said.

Brokers currently must meet a standard to offer clients "suitable investments," while most registered investment advisers have a fiduciary duty to put clients' best interests first.

The Securities Industry and Financial Markets Association, Wall Street's main lobbying group, had been opposed to a fiduciary standard for brokers until last year, when the group said it supported a single national rule for brokers and financial advisers.

"The brokerage industry is now talking about a difference in degree rather than in kind," said Mercer Bullard, founder of Fund Democracy LLC, an advocacy group in Oxford, Miss.

"The source of firmest opposition is the insurance industry, which doesn't want to disclose conflicts of interest."

The regulations will increase costs for consumers and alienate middle-income investors, said Thomas Currey, president of the 200,000-member National Association of Insurance and Financial Advisors in Falls Church, Va.

Dually registered insurance agents are permitted to sell variable insurance products, such as variable annuities, which are generally considered securities, Currey said.

"Requiring compliance with fiduciary standards will drive many advisers out of the market and eliminate a valuable advisory resource to consumers," Thomas Kelly, a licensed life insurance agent and registered representative in O'Neill, Neb., wrote in comments to the SEC.

The additional risk of lawsuits will increase costs for consumers, he wrote.

"No one likes new rules, but I believe a Finra 'rules-based' approach offers the best opportunity for compliance by brokers and, therefore, the investing public," wrote Robert Burke, president of Commonwealth Financial Partners, an insurance and financial services firm in Virginia Beach.

Insurance agents who are dually registered are subject to rules, inspections and fines by the Washington-based Financial Industry Regulatory Authority, the self-regulator funded by securities firms. State regulators generally oversee the insurance industry.

Variable annuities sold by insurance agents are the "most abused investment products" in part because of the hidden compensation structure under which they're sold, Fund Democracy's Bullard said.

These annuities offer investment options including stocks, bonds and money market funds.

"It would take an actuary days to reverse-engineer an insurance policy and tell you where all the premiums are going," said Luke Dean, academic coordinator of the financial planning program at William Paterson University in Wayne, N.J. "There's no way consumers can tell what they're being sold."

Sifma, which has said it supports putting clients' interests first and disclosing conflicts of interest, still isn't in line with the fiduciary principles outlined in the Investment Advisers Act of 1940, according to Knut Rostad, chairman of the Committee for the Fiduciary Standard. The committee is a group of financial professionals who favor a fiduciary standard that meets the requirements of the Investment Act.

That's because Sifma believes that disclosures are sufficient for managing conflicts and that they put the onus on clients to make informed decisions rather than holding advisers accountable, said Rostad, regulatory and compliance officer at Rembert Pendleton Jackson Investment Advisors in Falls Church.

Sifma spokesman Andrew DeSouza said by e-mail that the main objective of any standard is to ensure it is implemented in a uniform manner, protects investors and preserves individual investor choice.

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