Adviser groups step up lobbying as DOL rule nears completion

Organizations opposed to the fiduciary rule invested more in Capitol Hill outreach efforts last year, trying to convince Congress to stop the measure

Feb 4, 2016 @ 2:00 pm

By Mark Schoeff Jr.

+ Zoom

A pending Labor Department regulation that would raise investment advice standards for retirement accounts has caused adviser interest groups to step up their spending on lobbying lawmakers.

Last year, groups opposed to the rule invested more in Capitol Hill outreach efforts, as they tried to convince members of Congress to stop the measure.

The Financial Services Institute boosted its lobbying expenditures by 21% — from $685,151 in 2014 to $829,152 in 2015 — according to records filed with the Office of the Clerk in the House of Representatives.

The group represents independent broker-dealers and their financial advisers, who have resisted the DOL rule. Like most of the financial industry, they assert that it will significantly increase liability risk and regulatory costs for brokers and potentially price people with modest accounts out of the advice market.

“Three letters: D-O-L,” Chris Paulitz, FSI senior vice president for membership and marketing, wrote in an email citing the reason for the higher lobbying expenditures. “With the strong support of our board and members, we have increased our capacity to protect small investors' access to our members' critical retirement advice.”

The Insured Retirement Institute, a trade association that represents the retirement-income industry, including annuities, increased its lobbying spending by 57% over the last year – from $230,000 in 2014 to $360,000 in 2015. The group is concerned that the DOL rule will hurt annuity sales.

“As you can imagine, with DOL at the forefront, we allocated more internal resources to this effort,” IRI spokeswoman Danielle Holland wrote in an email. The organization also hired a law firm to help it respond to the rule.

The National Association of Insurance and Financial Advisors also opposes the rule and spent $2.4 million in lobbying in 2015, after spending $2.8 million in 2014.

Lobbying amounts, 2014-2015
Source: Office of the Clerk, U.S. House of Representatives
*Consumer Federation of America

The DOL regulation, which requires financial advisers to act in the best interests of their clients in 401(k) and individual retirement accounts, took its last step toward finalization last week. This week, lawmakers advanced legislation in the House that would stop the rule.

Some of the bigger organizations opposed to the DOL regulation held their lobbying expenditures steady. The Securities Industry and Financial Markets Association spent $7.7 million in 2015, compared to $7.5 million in 2014. The group has a vast policy agenda that goes far beyond the DOL rule.

The Investment Company Institute, which like SIFMA is opposed to the DOL rule but also lobbies on an array of issues, spent $5.5 million in 2015 and $5.2 million in 2014.

On the flip side, the interest group with the most muscle supporting the rule is not an adviser organization but AARP, which spent $7.6 million on lobbying in 2015 and $9 million in 2014.

Several groups that support the rule lobby on a much smaller scale, dollar-wise. The Financial Planning Coalition — comprised of the Certified Financial Planner Board of Standards Inc., Financial Planning Association and National Association of Personal Financial Advisors — spent $40,000 in 2015 and $50,000 in 2014.

Another rule proponent, the Consumer Federation of America, spent $70,000 lobbying in 2015 and $90,000 in 2014.

One adviser group that hasn't waded into the DOL rule debate has increased its lobbying expenditures. The Investment Adviser Association spent $140,000 in 2014 and $180,000 last year. The higher amount reflects additional time IAA staff devotes to lobbying and the costs of outside counsel on such topics as protecting seniors from financial exploitation and increasing the Securities and Exchange Commission's budget, according to Neil Simon, IAA vice president for government relations.

The industry-funded organization that oversees brokers also allocates a hefty amount to lobbying. The Financial Industry Regulatory Authority Inc. spent $820,000 in 2015, down from $870,000 in 2014.


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