NAPFA leader claims 'moral high ground' in fiduciary fight

Organization wants to strengthen its lobbying punch to counter the likes of NAIFA and others that oppose a clients'-best-interests rule

Oct 26, 2015 @ 1:06 pm

By Mark Schoeff Jr.

Fee-only investment advisers who support a pending Labor Department advice rule say they will step up their lobbying in order to project their voices amid the din of industry opposition.

“We are outspent and outgunned, but we have the moral high ground,” Dave O'Brien, founder of O'Brien Financial Planning and a member of the National Association of Personal Financial Advisors' public policy committee, said in a session at the group's fall conference in Indianapolis last week.

The organization's members are confident they have the right message. They argue that the proposal, which is designed to reduce conflicts of interest in advice to 401(k) and individual retirement accounts, would protect investors from high-fee products that erode retirement savings.

But the National Association of Insurance and Financial Advisors said NAPFA and other rule-backers support the regulation because it favors the fee-only advice model. They say it puts brokerage-based advisers at a disadvantage by significantly raising their liability risk and regulatory costs.

“NAIFA certainly does not concede the 'moral high ground' in the debate over the DOL proposal,” NAIFA president Jules Gaudreau said in a statement. “In fact, some of the most vocal proponents of the DOL proposal seem to be looking out for their own interests. They have put a lot of effort into supporting new regulations on advisers who they see as their competition.”

The rule resonates with NAPFA members, who believe their fee-only approach to advice allows them to avoid conflicts of interest. NAPFA members also must be certified financial planners, who already are required to place their clients' interests ahead of their own.

“NAIFA has always said there is absolutely a place for fee-only advisers,” Mr. Gaudreau said. “However, we do not believe in a one-size-fits-all approach.”

Fierce lobbying against the DOL proposal is leaving NAPFA and its allies in the dust.

Mr. O'Brien played a television commercial produced by opponents of the rule, including NAIFA, that depicts a construction company manager asserting that the measure would make it impossible for him to offer a retirement plan to his workers.

“That's what's happening when you have expenditures on lobbying like this,” Mr. O'Brien said.

The latest figures on lobbying bear out Mr. O'Brien's analysis on spending. Groups that oppose the DOL rule are investing much more than those supporting it.

NAIFA has spent $1.9 million on lobbying this year through Sept. 30, according to filings with the Office of the House Clerk. Two other groups who oppose the rule likewise have opened their wallets wide: The Securities Industry and Financial Markets Association, whose membership includes wirehouses, has spent $5.3 million and the Financial Services Institute, which represents independent broker-dealers, has spent $643,828. The expenditures are directed toward other issues in addition to the DOL rule.

The umbrella group that includes NAPFA, the Financial Planning Coalition, has spent $30,000 so far this year on lobbying. In addition to NAPFA, the coalition includes the Financial Planning Association and the Certified Financial Planner Board of Standards Inc.

As FPA is already doing, NAPFA plans to conduct its own lobbying outside of the coalition in 2016, according to NAPFA leaders.

The effort will include the first NAPFA Capitol Hill day, in which NAPFA members visit Washington to lobby lawmakers.

“There's an appetite within the membership for it,” said Geoffrey Brown, NAPFA chief executive.

At the NAPFA conference, leaders of the public policy committee said they hope policy arguments can overcome the size disadvantage they face in going up against industry groups.

“We don't have a lot of money to throw at this, but we do have ideas,” said John Gugle, principal at Alpha Financial Advisors and a member of the committee.


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