(Adds details about SEC efforts to develop a different industry standard)

By Jonathan Stempel

March 15 (Reuters) - A federal appeals court on Thursday voided the U.S. Department of Labor's "fiduciary rule," an Obama administration measure adopted in 2016 meant to curb conflicts of interest among providers of financial advice to Americans planning for retirement.

The 2-1 decision by the 5th U.S. Circuit Court of Appeals is the second major victory for financial services groups under President Donald Trump's administration. Last year, Congress killed a Consumer Financial Protection Bureau rule that had restricted financial institutions from forcing clients to sign mandatory arbitration agreements.

The U.S. Chamber of Commerce, the Securities Industry Financial Markets Association and others argued that the fiduciary rule was too burdensome, and could make providing retirement advice too costly, particularly for lower-income Americans.

The rule was championed by consumer advocates. It required brokers to put their clients' best interests first when advising about individual retirement accounts and 401(k) plans.

Writing for Thursday's majority, Circuit Judge Edith Jones said the Labor Department acted unreasonably, arbitrarily and capriciously in expanding a 40-year-old definition of "investment advice fiduciary," and did not deserve the deference that courts often accord federal agencies.

Jones wrote that while the department "has made no secret of its intent to transform the trillion-dollar market" for retirement investments, it was "not hard to spot regulatory abuse of power when an agency claims to discover in a long-extant statute an unheralded power to regulate a significant portion of the American economy."

Chief Judge Carl Stewart dissented, saying the Labor Department acted "well within the confines set by Congress in implementing the challenged regulatory package."

The department could ask the entire New Orleans-based appeals court to rehear the case, or appeal to the U.S. Supreme Court. The Labor Department could not immediately be reached after business hours for comment.

The opponents of the rule, which included the Financial Services Institute, the Financial Services Roundtable and the Insured Retirement Institute, said in a joint statement that the court's ruling will help preserve affordable financial advice, and that they now look to the U.S. Securities and Exchange Commission to develop a "clear ... workable standard."

The SEC has taken steps to create a uniform fiduciary standard that would apply industry-wide.

Stephen Hall, legal director for the advocacy group Better Markets, in a statement called the decision "a terrible setback in the fight for the simple, common sense principle that Americans saving for retirement deserve investment advice that is in their best interest." (Reporting by Jonathan Stempel in New York and Michelle Price in Washington; Editing by Lisa Shumaker and Grant McCool)