Practice Management

Industry groups give congressionally, not on federal level

Trade associations in the investment advice sector can agree on one thing when it comes to politics: It…

Trade associations in the investment advice sector can agree on one thing when it comes to politics: It doesn't make any sense for their political action committees to donate to presidential candidates.

“Whatever we could give would be a drop in the bucket in terms of the presidential race, and it doesn't get you on their radar screen,” said Dan Barry, managing director of government relations and public policy at the Financial Planning Association. “Those dollars are better spent on congressional races.”

Capitol Hill is the most important political playing field for lobbying organizations trying to advance their agendas.

With lawmakers introducing legislation that would establish a self-regulatory organization for investment advisers and making decisions about the Securities and Exchange Commission budget, advocacy groups are trying to build relationships in Congress. One of the best ways is to donate to campaigns.

The Financial Services Institute Inc.'s PAC has tripled in size since 2010. By the end of the third quarter, it had raised $152,560 and donated $163,000 for the 2012 election cycle.

A PAC can give up to $10,000 per cycle to a political candidate.

“Our members are more and more astute and involved in the policymaking process and the political process,” said Dale Brown, the FSI's chief executive. “Giving to these candidates is an important part of the process in terms of good will, demonstrating we're willing to work with them.”

Trade group officials and investment advisers who donate to their PACs agree that a campaign contribution can't buy a vote on the House or Senate floor. But it can open the door for a meeting with a lawmaker because the donation is financed directly by trade group members rather than by their association dues.

“The member of Congress knows it is coming out of their pockets — these small-business men and women,” Mr. Barry said. “It demonstrates FPA members' commitment to the issues that FPA is advocating on.”

EBB AND FLOW

The party makeup of the donations from PACs tends to ebb and flow, depending on House and Senate majorities. PACs give almost exclusively to incumbents.

Currently, Republicans are getting the lion's share of support because the GOP controls the House.

In the 2012 cycle, the FSI's PAC has made 74% of its donations to Republicans and 28% to Democrats.

The Securities Industry and Financial Markets Association has spent $450,534 during the cycle, with 61% going to Republicans and 39% to Democrats.

The FPA has given 54% of its $70,450 donations to Republicans.

The Investment Adviser Association has given 66% of its $23,500 to Republicans.

“Party affiliation is nowhere near the top of the factors we use in determining who we support,” Mr. Brown said.

Neil Simon, vice president of government relations at the Investment Adviser Association, said that political spending normally evens out by the end of a campaign.

“It is not a partisan or ideological PAC,” he said.

“It reflects a certain pragmatism. We contribute to folks who our issues fall in front of on both sides of the aisle,” Mr. Simon said.

Several FPA members said that a contribution to the FPA PAC — and to members of Congress generally — is the best way to raise the profile of financial planning issues in Congress.

Pamela Sandy, founder and chief executive of Confiance LLC, also endorses attending candidate fundraisers, where “face time” can be invaluable.

“It's an opportunity to ask questions and get feedback,” she said.

It is also a chance to raise the flag of the investment advice sector on the political playing field.

— Mark Schoeff Jr.