Few threats are scarier to the average independent life insurance producer than the potential banning of commission-based compensation for insurance product sales. And the prospect of adapting from a suitability standard of care to a fiduciary standard opens up another can of worms.

Insurance producers traditionally have been subject to a suitability standard under the Securities Exchange Act of 1934, which requires sellers to verify that their products appear to suit customers' needs. Investment advisors are regulated as fiduciaries under the Investment Advisors Act of 1940, which requires sellers to put clients' needs and interests ahead of their own.

Soon, the suitability standard may well be eliminated in favor of a universal fiduciary standard that would apply to both groups. Proponents of a universal fiduciary standard—including many financial planner and consumer groups—claim consumers who rely on the financial advice of experts are confused by the different standards of care. These consumers are at an information disadvantage, they say, and vulnerable to exploitation by advisors who are not required to make recommendations in the best interest of the customer. Opponents of a fiduciary standard—including many life insurance industry trade associations—say a universal fiduciary standard is unnecessary because the current suitability standard is effective. Opponents also say the imposition of a universal fiduciary standard would result in higher costs and reduced choices and service for consumers.