The 30-day comment period out of the way, the Securities and Exchange Commission is now setting to work crafting a study that will ultimately determine the standard of care that agents and brokers must use in selling investment products in the future.

Under the provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act that is governing its actions, the SEC will now have six months to complete a study on the fiduciary standard issue.

The provision in the law dealing with the issue then gives the agency the clear power to draft a new standard-of-care rule based on the findings of the report.

More than 2,700 comment letters were sent to the agency on the issue. But all the letters signaled is that there is no consensus within the financial services industry on the proper standard on sale of investment products, and whether a uniform study is necessary.

The divergence within the industry can be summed up by the comments of the National Association of Insurance and Financial Advisers and the Association for Advanced Life Underwriting on the one hand, and the Financial Planning Coalition on the other.

In its letter, NAIFA officials contend that eliminating the broker-dealer exclusion for its members could result in a substantial increase in “frivolous litigation” that could result in “catastrophic costs, likely forcing many of them to shut down their operations.

In its letter, the AALU argues that “the current level of regulation and oversight of insurance professionals when selling SEC-registered insurance products is distinct and should be taken into consideration by the SEC as it considers whether there are gaps or overlaps in regulation.”

By contrast, the Financial Planning Coalition contends that the SEC should adopt “a strong and uniform fiduciary standard of care for broker-dealers and investment advisers when providing personalized investment advice about securities to retail customers.”

It called the broker-dealer standard of care under the Financial Industry Regulatory Authority’s suitability rule “ineffective in protecting investors receiving personalized investment advice because it leaves substantial gaps in coverage when compared to the fiduciary standard applicable to investment advisers.”

Moreover, the coalition said, the fiduciary standard adopted by the agency should be uniform.

The SEC “should not allow certain firms to provide personalized investment advice to retail customers at a lower standard simply to accommodate those firms’ business models.

According to industry lawyers, the SEC has some flexibility in a final rule to establish a different standard of care for insurance professionals selling a limited range of financial products as captive agents.

NAIFA officials say their priority is that a final regulation should include these provisions:

–Allowing registered representatives to continue to receive commissions on the sale of products as they do today.

–Allowing registered reps to continue to recommend products that are within the limited basket of products that every broker-dealer has to maintain.

“No broker-dealer in the world offers every product within a type,” one NAIFA staff official said.

–Maintenance of the current standard that once a sale is completed that whatever rule governs “best interest” stops at that point and does not continue on ad infinitum.

The NAIFA official said that the trade group would like, “in any final rule, that the broker-dealer exception be maintained.”

The NAIFA official argues that within Sec. 913, the provision of the financial services reform law that governs the crafting of the new regulation, the SEC “has the authority to maintain the broker-dealer exception.

“The law would have to be changed to eliminate the broker-dealer exception,” he said.