Retirement savers may not know it, but not all of those who dispense financial advice are required to keep their clients' best interests in mind. Reuters/Max Whittaker

The U.S. House of Representatives has advanced legislation that would stymie the Obama administration’s efforts to reduce conflicts of interest among financial advisers, a roadblock for a campaign championed by consumer groups and stubbornly opposed by brokers and insurance companies.

Though the news was overshadowed by Tuesday’s passage of a much-awaited budget bill and the election of a new speaker, the legislation could derail the efforts of the White House, which announced support for the Labor Department’s proposed rules earlier this year.

Millions of Americans trust securities brokers who dispense advice at companies like Wells Fargo and Morgan Stanley to steward their retirement savings. But many of these advisers have no legal obligation to put their clients’ best interests ahead of their own financial gain.

For years, consumer advocates have pushed federal regulators to subject all retirement advisers to a fiduciary standard, which would mandate that they place clients’ best interests first. In theory, that would mean seeking out the safest and lowest-fee investments, regardless of what kind of commissions advisers get out of them.

But those efforts have so far foundered, and advisers can sell clients higher-fee products as long as they can be deemed “suitable,” a less stringent standard than fiduciaries must follow.

According to White House estimates, the cost of this conflicted advice amounts to $17 billion annually in fees paid by unwitting savers for products like loaded mutual funds. Industry groups dispute those numbers, arguing that a fiduciary standard would put advisers out of business and make financial advice unaffordable for middle-class savers.

The bill passed Tuesday, brought by Rep. Ann Wagner, R-Mo., would require the Labor Department to hold off on its fiduciary standard rulemaking until the Securities and Exchange Commission has a chance to take a stab at it. It would also compel the SEC to produce a definitive study on the effects of a potential industrywide standard.

Consumer groups, however, see those requirements as delay tactics. The SEC has tried and failed to agree upon a uniform fiduciary standard for brokers and retirement adviser for years.

The 2010 Dodd-Frank Act gave the SEC the explicit authority to create a rule designating all brokers who dispense advice fiduciaries. Despite repeated efforts, however, the SEC has yet to deliver a rule. In June it became clear that the process had once again given way to partisan gridlock.

The SEC’s torpor compelled former SEC Commissioner Arthur Levitt to call the absence of rules around retirement advisers a “national disgrace” last month. Industry groups have lobbied aggressively against any fiduciary rulemaking, proposing their own set of standards.

The White House has come out against Wagner’s bill. Noting that the SEC had already studied the effects of “biased advice” and had collaborated with the Labor Department on the rules, the Office of Management and Budget released a statement warning, “This legislation puts a roadblock in the way of preventing such harmful conflicts, which hurts businesses, consumers, and retirees and their families.”

House Democrats who had previously lined up behind previous versions of the bill moved against the latest legislation, arguing that the Labor Department’s lengthy rulemaking had addressed industry concerns. Rep. Gwen Moore, D-Wis., said the rule would “strike the appropriate balance between consumer protection and access to investment advice.”

The bill passed 245-286, with only three Democrats for and two Republicans against. The Banking, Housing and Urban Affairs Committee of the Senate received the bill. Wagner has said she believes she has “support over in the Senate” for the bill.