The uncertainty and confusion around the fiduciary standard has jolted the financial services industry leading hundreds to pack the rooms at FINRA’s annual conference in Baltimore.

From the plenary session on the state of the industry Thursday morning to the keynote speaker, Neal S. Wolin, deputy secretary of the Treasury, before lunch, attendees were bombarded with words like due diligence, compliance, regulation, and accountability.

One advisor, who refused to be identified because of the sense of fear rippling through the room, said this year was the first time in his career he has come to FINRA’s annual conference that was sold out. “Everyone wants to know what is going on and what will happen next,” he said.

His concern is that the fiduciary standard will hurt little firms worse than the big firms because of cost, lack of resources, and time.

Wolin said the regulatory reform bill that just passed the House and Senate is the most sweeping reform in generations. He said the reform is overdue and should be as strict as possible.

But some in the industry do not agree. There are those who worry the Obama administration will not stop with the regulatory reform bill and will continue to tighten the screws. Yet no one knows what that will mean for their firm and how it will affect their business.

Even with regulatory reform, advisors said that unscrupulous individuals that want to de-fraud investors will find a way. In the morning session on “Enforcement Case Trends,” James Shorris, executive vice president and executive director of FINRA Enforcement, said that the regulator continues to see Ponzi schemes on an ongoing basis, from micro-Ponzis to those worth millions like the Bernard Madoff case.

But, he said, there are usually “red flags,” that firms can watch out for.

It’s all about protecting one’s firm and one’s clients, Shorris said.

To be sure, there is always more due diligence that could be done.

“Knowing FINRA is looking closely at regulation, even if I had what I thought was a reasonable system of due diligence I would go and kick the tires again,” said Neal Sullivan, partner at Bingham McCutchen.

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