PALM DESERT, Calif. -- The establishment of a fiduciary standard that applies to how broker-dealers should care for their customers is not likely to come until after the one-year anniversary date of passage of the 2010 Dodd-Frank Wall Street Reform Act that required it.

The setting of a standard that applies to broker-dealers as well as investment advisers will take months to resolve because of competing versions of the standard that will be floated by diverse federal agencies, Jennifer B. McHugh, senior advisor to Securities and Exchange Commission chairman Mary L. Schapiro, said Monday.

She did not name the different agencies working on different versions. But the SEC’s own proposal comes after it received 3,500 comment letters on how the standard for properly looking out after customers’ interests should be written, she told attendees of the 2011 Investment Company Institute Mutual Funds and Investment Conference.

Broker-dealers, she noted, typically have inventory in-house which they can use to satisfy customers’ interests in such stocks. Investment advisers, on the other hand, typically do not.

A big obstacle: Potential requirements to disclose each every such principal trade and … get consent. That could make the practice, even if allowed and defined, practically impossible, according to the McHugh and speakers on the “Regulatory Revolution” panel at which she appeared by video link.

Craig S. Tyle,
executive vice president and general counsel at
Franklin Templeton Investments, said that the fiduciary standard could affect mutual fund firms in some limited fashions.

In this case, the principal issue could be disclosing how a broker is compensated for selling a mutual fund. If there is a revenue-sharing arrangement that could influence a recommendation, that very well could have to be disclosed, in the name of fiduciary duty.

Such disclosures could be made online, which moderator Karrie McMillan, general counsel of the 
Investment Company Institute, said is a method of disclosure which should be increasingly used.

President Obama signed the Dodd-Frank bill into law on July 21, 2010.