Seven advisor and investor groups in a March 28 letter jointly warned the Securities and Exchange Commission that it should not heed brokers who want to evade more stringent fiduciary duty to their customers than advisors face under the Investment Advisor Act. The combined lobbies were reacting to a suggested blueprint for how the SEC should set up its fiduciary duty requirements, which the securities lobby, the Securities Industry and Financial Markets Association, gave the agency last year. SIFMA, the new letter says, is out of step with the intent of the Dodd-Frank in asking for a new separate fiduciary standard that doesn’t force disclosure of conflicts of interest.

Among those signing the letter were the Investment Adviser Association, the Consumer Federation of America, Fund Democracy and the AARP. “We strongly disagree with the suggestion that the substantive uniform standard articulated through [coming SEC rules] should be ‘new’ or ‘separate and distinct from the general fiduciary duty implied under Section 206 of the Advisers Act.”

The advisor/investor letter said SIFMA was wrong to construe Dodd-Frank as prohibiting conflicts of interest when brokers recommend trades to investors, so long as the conflicts are disclosed. The Investment Company Institute said it was in favor of disclosing broker conflicts of interest. If that’s done, the contractual arrangements with fund companies to have brokers sell fund shares “should not be deemed inappropriate.”