Legislators finally reached a compromise on the fiduciary standard bill late Thursday after fierce last-minute wrangling over its contents.

While the House’s version pushed for the Securities and Exchange Commission to create a fiduciary standard, the Senate preferred instead to have the SEC study differences between its fiduciary standard and the suitability standard many brokers are held to by FINRA, without giving the SEC the power to do anything about it.

The final bill contained elements of both—the SEC is charged with studying differences in fiduciary and suitability standards over the next six months, and then potentially create rules that fill any gaps, although the language of the bill doesn’t make this mandatory. Currently, registered investment advisors are held to a fiduciary standard under the Investment Advisers Act of 1940, whereas investment advisors who hold securities licenses report to FINRA, which requires advisor recommendations to be “suitable” to a client’s needs. RIAs have long complained that the suitability standard is not good enough and that anyone selling investment products should do so only when it is in a client’s best interests.

Banks, in particular, could be hurt by a blanket fiduciary standard, which could hypothetically put an end to platform programs if a new rule stipulated that investors pay a flat fee for anything they buy because many bank clients have fewer assets to invest. Heywood Sloane, managing director of the Bank Insurance and Securities Association notes that the bill’s current language suggests proprietary products, commissions and selected lists of products aren’t off the table, but he remains wary of what the SEC might decide. “As the SEC works through this, it has to allow people to provide services in a way that earns them a living,” he says. “If not, you’ll see only high-net-worth individuals taken care of because the margins will be too tight on smaller accounts.”

Many bank customers come in with as little as $10,000 or $20,000 to invest, and there’s no way a fee-charging advisor can afford to spend the time crafting a full financial plan for accounts of this size. That’s why banks created platform programs, licensing bankers so they could sell smaller clients investment products that fit their needs without requiring a full-fledged investment advisor to step in. “There’s no philosophical argument from advisors against acknowledging that your clients are important to you and you want to do right by them,” Sloane says. “The question is whether implementation of a fiduciary rule would put them out of business.”

Valerie Brown, CEO of Cetera, home to broker-dealers Primevest, Multi-Financial and Financial Network, says the SEC is well aware of the issues involved. “We know from dialogue with the SEC that it understands that if it goes too far toward the ’40 Act, applying to our world as written, it will take away access to good financial advice for Middle America, which I don’t believe is Congress’ intent,” she says.

Brown notes that the bill itself already allows for commission business and for advisors to make recommendations after which the fiduciary requirement stops, which means advisors could still hypothetically afford to serve smaller clients, depending on how fee for advice is structured. By comparison, the Investment Advisors Act doesn’t support commission business and its fiduciary standard goes beyond the initial advice.

Brown also notes that the SEC may not be too keen to pile more responsibility for fiduciary oversight upon itself. “Even the SEC says it only has the resources to audit RIAs once every 10 years,” she says. “So while someone may be a fiduciary in name, they’re under-regulated, under-supervised and they can do damage for years before the SEC steps in, as Bernie Madoff showed us. People do what you inspect, not just what you expect.”

Ric Lager, an RIA and president of his own firm in Golden Valley, Minn., counters that Madoff wasn’t convicted on his advice, but on fraud related to his role as custodian. Lager maintains that a blanket fiduciary standard would separate slick salesmen from sage advisors. “It’ll be based on how well one advisor fares in up, down and sideways markets,” he says. “This would weed out bad advisors pretty quick.”

However, Dick Starr, director of legislative, regulatory and compliance affairs at BISA, doesn’t believe much will come of the issue. “So they’ll study this for six months, but to what purpose? They’ve already studied this issue; this is just kicking the can on down the road,” he says. “Kicking this to the SEC is a waste of time and a waste of trust by the committee. There are many ways a fiduciary standard can be accommodated and there’s no reason why not. This is financial reform in name only.”

Hypothetically, depending on how Congress acts on the SEC’s report, it could force many programs to take an advisory focus rather than sales today, Starr concedes, but he also notes that in six months’ time there will be a newly elected Congress, which will have a big impact on what actually happens.

Industry participants will continue to work closely with the SEC on its report, though. To be sure, it’s a balancing act for the over-burdened regulator, and with the political climate in flux, compromise is likely. Brown, for one, remains confident business sense will prevail. “I’m hopeful we’ll end up in a place that doesn’t eliminate choice or add so much to the cost that advisors can’t afford to serve their clients,” she says.