U.S. securities regulators are preparing to release two key studies this month that could lead to major changes in how investment advisers and brokers who offer advice to retail customers are regulated.

The studies, mandated by the Dodd-Frank financial reform law, require the Securities and Exchange Commission to dig into issues that could unleash a new regulator on investment advisers and could expose brokers to a strict mandate to put client interests first.

One study, which could be released as early as Friday, will look at the regulation of investment advisers and if they should be overseen by a self-regulatory group such as the Financial Industry Regulatory Authority (FINRA).

The other study, due to Congress by January 21, will explore imposing a uniform fiduciary standard on brokers and investment advisers offering advice to retail customers.

The study on the fiduciary standard will have the most immediate impact for investors. Its findings are likely to inform how the SEC writes rules to harmonize disjointed regulations for how investment advisers and brokers interact with their retail customers.

The issue has been a top priority for SEC Chairman Mary Schapiro, who has often complained mom-and-pop investors may not know the difference between someone offering investment advice and someone peddling financial products.

Currently, brokers and advisers are held to two different standards when dealing with retail customers. Advisers are held to a fiduciary standard that requires them to act in the best interest of their clients. Stockbrokers are held to a lesser suitability standard, which only requires them to offer products that are suitable to clients.

Over the years, however, the lines between the two have blurred as more brokers have gotten into the business of both offering advice and selling investment products.

At issue is how the SEC should tackle conflicts that can arise when brokers wear both hats. They may, for instance, get commissions for offering certain products. Or their firms may trade with retail investors on a principal basis.

Those who favor the traditional fiduciary standard fear the SEC may opt to write disclosure-based rules for brokers that will not be transparent or could be easily circumvented.

Disclosure is, at best, insufficient for addressing conflicts of interest, said Knut Rostad, the chairman of the Committee for the Fiduciary Standard in a recent SEC letter. But others say imposing the currently vague fiduciary standards on brokers will not work and may limit product choice for investors.

The brokerage industry has proposed a disclosure-based solution.

What we are hoping as a result of this SEC process is they come up with a practice that allows firms to make the disclosure of the conflict, get a client waiver if the client so desires and then you have a way forward, said Ira Hammerman, the general counsel at the Securities and Financial Markets Association, or SIFMA.

Ultimately, observers expect the SEC may try to come up with a new definition of fiduciary duty that finds a middle ground.

I wouldn't be surprised if they do impose a modified fiduciary standard on broker-dealers -- one that may not be as strict as a common law fiduciary duty, said Hillel Cohn, a partner with Morrison & Foerster.

SRO BEING CONSIDERED FOR ADVISERS

The other study due out soon will look at the oversight regime of investment advisers, another area of securities law that differs from how brokerage firms are regulated.

Brokerage firms today are overseen by the SEC, as well as FINRA, while investment advisers that manage larger amounts of assets fall to the SEC and have no self-regulation. A lack of resources and funding at the SEC, however, has made it hard for the SEC to conduct exams as frequently as they should be.

Proponents of a self-regulatory organization, or SRO, for advisers say it is the best way to ensure investors are adequately protected.

Advisers oppose a self-regulatory group, especially if the group selected to oversee them is FINRA. They say they prefer the government to step up its oversight of the industry instead of outsourcing it to a private group.

Congress ultimately has to act to determine if investment advisers will be subjected to a new regulatory regime.

Internally, there is a good chance of some dissent among commissioners over the best approach. Democrat Elisse Walter, a former FINRA senior executive vice president, for instance, favors an SRO, while Democrat Luis Aguilar does not. Schapiro, the former head of FINRA, is recused from voting on the report.

Still, even if commissioners there are divided on a course of action, the decision to establish an SRO or increase the SEC's resources will fall to Congress. And that means action on the issue in the near-time may not be likely.

(Reporting by Sarah N. Lynch; editing by Andre Grenon)