As the final details of the SEC’s proposed Regulation Best Interest remain pending, Maryland and Nevada are taking steps to introduce fiduciary standards at the state level, according to news reports.

The Maryland Financial Consumer Protection Commission, launched two years ago, has put out a report in which it defends such a measure because of alleged failures at the state and federal level, InsuranceNewsNet writes.

"Since (the) SEC and the state insurance regulators have proposed standards that largely preserve the status quo, individual states may need to provide greater protections that investors expect from financial professionals who provide investment advice," the report reads, according to the insurance news website.

The SEC is currently working through comments about its proposal to revamp investment advisor and broker standards, and it remains unclear whether the commission’s final rule will impose the fiduciary standard on brokers.


The National Association of Insurance Commissioners, meanwhile, proposed subjecting annuity sales to the less-stringent suitability standard. And the Department of Labor’s fiduciary rule, which purported to require only retirement account advisors to put clients’ interest first, was defeated in the courts last year.

The Maryland state legislature is expected to follow the commission’s recommendation with a bill, Andrew Remo, legislative affairs director for the American Retirement Association, tells InsuranceNewsNet.

Last year, Democratic State Sen. James Rosapepe submitted a bill to extend the fiduciary standard in the state, but it has since been tabled following pressure from the financial industry lobby, according to the website. An aide to Rosapepe tells InsuranceNewsNet that the senator will use the commission’s report to submit another bill.

And last Friday, the Nevada Securities Division began seeking comment on a fiduciary rule implementing legislation passed at the state level in 2017, according to ThinkAdvisor. The rule would apply to broker-dealers and sales representatives offering investment advice, handling discretionary trading or providing investment advice, and extends to professionals such as advisors, financial planners, wealth managers and retirement and financial consultants, among others, the publication writes. These professionals would be able to collect commissions “so long as it is in the client’s best interest to be charged by transaction as opposed to other types of fees,” the state regulator says, according to ThinkAdvisor.

Nevada could be the first to adopt a state-level fiduciary rule, as soon as the end of the year, Remo tells the publication. Nonetheless, Remo says that it’s likely to face legal challenges, as the current proposal doesn’t carve out retirement plans covered by the federal Employee Retirement Income Security Act of 1974, according to ThinkAdvisor.

Maryland and Nevada aren’t the only states to consider applying the fiduciary standard at a state level: the New Jersey Bureau of Securities sought comments at the end of last year for a pre-proposal for a state fiduciary rule, as reported. The state could soon follow in Nevada’s steps, according to ThinkAdvisor. Connecticut passed a bill requiring some providers for 403(b) plans to disclose conflicts of interests to a plan’s fiduciaries, which was scheduled to go into effect this month, as reported.

Later this year, New York is expected to put in place rules forcing the best interest standard on anyone selling life insurance and annuities, according to InsuranceNewsNet.

Many in the industry oppose the idea of state fiduciary standards, claiming that differences from state to state would bog down investment advice.