Like Labor's vacated fiduciary rule, Nevada's proposal includes a new private right of action, allowing investors to sue for allegations of fiduciary breach.

The Securities and Exchange Commission's proposed Regulation Best Interest, which is designed to raise brokers' existing suitability standard for investment recommendations to retail investors, does not include a private right of action. Under that rule, the SEC and FINRA would enforce breaches.

“That single thing will make the Nevada rule much more impactful than Reg BI,” said Reish in a recent webinar.

Nevada hosts 174 FINRA-registered firms with 1,278 branches.

The state's proposal applies a broad definition of investment advice, and offers only narrow exemptions for activities that would fall outside the realm of fiduciary advice, attorneys with Drinker Biddle said.

Dually registered brokers are treated as RIAs under the rule, and cannot avail themselves of exemptions, another major way Nevada is deviating from the SEC's Reg BI.

“This is the opening salvo in what is going to be a much broader war,” said Brad Campbell, a partner at Drinker Biddle and former head of Labor's Employee Benefits Security Administration in the Bush Administration.

New Jersey is prepping a proposed fiduciary rule; New York has issued regulations for sales of annuities. A number of states are considering following suit, said Campbell, who, along with others in industry, fears the “Balkanization” of securities regulations, whereby practitioners will be subject to a patchwork of different standards across state lines.

From his experience having overseen the drafting of regulations at the federal level, Campbell suggested Nevada's proposal, produced by the Securities Division of Nevada's Secretary of State, leaves plenty to be desired.

“I am not impressed with the quality of the drafting in this proposal,” he said matter-of-factly. “It doesn't look like the product of 14 months of deep thought.”

Here a few highlights of the proposal:

1.  These broker-dealer or sales rep activities would constitute fiduciary advice under the following time periods:

• Providing investment advice;
• executing discretionary trading;
• maintaining AUM; acting in a fiduciary capacity to the client;
• periods in which fees or gains are disclosed; through the completion of contracts;
• through the term of engagement of services.

2. No dual-registrant backdoor:

“Any investment adviser who also acts as a broker-dealer, whether through the same entity or related entity, and any representative of an investment adviser who also acts as a sales representative, is presumed to be acting in their capacity as an investment adviser or representative of an investment adviser.”

Dually registered brokers will not be able to rely on the proposed rule's exemption for the ongoing monitoring of investments.

3.  Investment advice includes, but is not limited, to the following:

• advice or recommendation to buy, sell, or hold a security
• advice or recommendation on the value of a security
• providing an analysis or report of a security
• monitoring an account for the purpose of recommending a buy, sell, or hold of a security
• advice or recommendation on the type of account a client should open
• advice or recommendation on fee options available to a client
• providing information on a personal investing strategy
• providing a financial plan if it included buying, selling, or holding a security
• providing a limited list of securities available for purchase
• providing information on a security not listed in offering documents
• recommending a broker-dealer, adviser, or other investment service provider
• providing advice or a recommendation on an insurance product

4. What is not fiduciary investment advice:

• providing an investment strategy to the general public
• publishing an investment company ranking or a bond mutual fund volatility rating ranking consistent with FINRA rules

5. Exemptions to fiduciary standard:

• executing an unsolicited transaction for a client whose assets are not managed by the broker-dealer
• a broker-dealer executing a trade in good faith that was recommended to a client by another registered fiduciary adviser
• clearing firms executing trades at the direction of broker-dealers

6. Episodic Fiduciary Duty Exemption:

Under the exemption, a broker-dealer has a fiduciary duty related to specific advice given to a client, but does not have an ongoing duty to monitor the investment if:

• the broker-dealer does not manage the client's assets
• the broker-dealer does not create periodic financial plans for the client
• does not perform discretionary trading for the client
• does not have a previous or concurrent fiduciary relationship with the client
• the client does not reasonably expect ongoing advice
• the client solicited the investment advice

7. No escape hatch via titling:

A broker-dealer holding themselves out under the following titles does not limit their fiduciary duty and cannot rely on the Episodic Fiduciary Duty Exemption:

• adviser; advisor
• financial planner; financial consultant
• retirement consultant; retirement planner
• wealth manager
• counselor
• or other titles the Administrator of the rule may deem inappropriate

8. Propriety products:

Sales of propriety products do not in and of themselves constitute a fiduciary breach, so long as the client is advised that the product is proprietary and on all of the risks associated with the product.