Broker-dealer groups heavily armed in fiduciary battle
In the high-stakes political game surrounding the adoption of a fiduciary standard, broker-dealer interest groups have outgunned their opposition in spending.
In the high-stakes political game surrounding the adoption of a fiduciary standard, broker-dealer interest groups have outgunned their opposition in spending.
In the first quarter, the Securities Industry and Financial Markets Association spent $1.3 million on lobbying, according to the Center for Responsive Politics. The National Association of Insurance and Financial Advisors spent $315,000, while the Financial Services Institute Inc. doled out $90,000.
On the other side, the Investment Adviser Association spent $50,000 in the first quarter, while the lobbying tab at The Financial Planning Coalition — the umbrella for the Certified Financial Planner Board of Standards Inc., the Financial Planning Association and the National Association of Personal Financial Advisors — was $30,000.
First-quarter numbers suggest that the groups are on track to spend about as much on lobbying in 2011 as they did in 2010, when SIFMA spent $5.4 million, NAIFA $1.3 million and the FSI $150,000. The fiduciary groups’ overall spending in 2010 was much lower — $160,000 for the Investment Adviser Association and $210,000 for the Financial Planning Coalition.
NAIFA and SIFMA also are major campaign contributors, donating $2 million and $574, 571, respectively, during the 2010 election cycle. Over the same period, the Investment Adviser Association’s political action committee contributed $33,500 to campaigns.
In terms of their in-person lobbying efforts, the interest groups are fairly even competitors.
Between Aug. 26 and June 1, SIFMA conducted 12 meetings at the Securities and Exchange Commission on fiduciary issues, according to the SEC website. The IAA and the planning coalition have visited the SEC 11 times, while the North American Security Administrators Association Inc., which is on the same side of the fiduciary debate, held three meetings.
Even though the fiduciary groups expend about as much shoe leather as their financial industry counterparts, they still feel outgunned when it comes to disseminating their message.
“The brokerage and insurance industries are very effective in their lobbying both on [Capitol] Hill and at the SEC,” said David Tittsworth, executive director of the Investment Adviser Association. “I think we have a long way to go, to be perfectly honest.”
“The David-and-Goliath meta-phor doesn’t quite fit the situation,” said David Mendels, director of planning at Creative Financial Concepts LLC and president of the Financial Planning Association of New York. “David had a slingshot; we have a peashooter.”
But even those with a larger war chest are not immune from lobbying frustrations.
William Johnstone, president and chief executive of Davidson Cos. and a member of the SIFMA board, said that Washington lawmakers and regulators don’t have a firm grasp of the financial industry and its many variations.
“There’s not an appreciation of the diversity of financial services in the United States,” he said. “There are a lot of financial services companies that are not located in New York City.”
Mr. Tittsworth agrees that the investment advice business is fragmented.
“To be effective, we need to marshal all the numbers we have,” he said. “I think it could be a very potent force if we were able to get everyone rowing in the same direction. I hope we’re getting better.”
— Mark Schoeff Jr.
Learn more about reprints and licensing for this article.
