As improved life expectancy stretches the retirement timeline for 76 million baby boomers, the insurance industry is hoping for unprecedented growth for income-generating investment products such as annuities.
Increasing the acceptance of these investment vehicles, however, requires more than well-honed sales pitches to investment advisers, who often are skeptical about their cost and complexity. There's another audience in Washington that can influence how the market develops.
“We need to do a better job educating policymakers about our industry and how it serves the American people,” said Cathy Weatherford, president and chief executive of the Insured Retirement Institute.
So far this year, the IRI has conducted 175 meetings with lawmakers on Capitol Hill, a significant increase over the 100 it held last year. And last December, the 20-year-old insurance trade group for the first time established a political action committee, which enables it to contribute to election campaigns, including those in the House and Senate.
LOBBYING COMPETITION
With hundreds of rules being written to implement the Dodd-Frank financial reform law and Congress grappling with the federal budget deficit and tax reform, the competition to get the attention of lawmakers is fierce. Special-interest groups such as the IRI are ratcheting up their lobbying efforts, dispatching hundreds of their members to Capitol Hill and increasing their political fundraising presence.
The Financial Services Institute Inc., which represents independent financial advisers and broker-dealers, conducted its advocacy summit in Washington last week. On the second day of that event, it sent 150 members to 260 congressional offices to press for a self-regulatory organization for advisers.
The last time FSI held an advocacy summit was in 2009, when it drew 100 attendees who held 100 meetings on the Hill.
Four years ago, Bill Dwyer, president of national sales and marketing for the country's largest independent broker-dealer, LPL Financial LLC, visited Washington four times. So far this year, he's been to the capital 16 times.
“That type of effort is called upon to send our message,” Mr. Dwyer told the FSI summit. “We are looking at the greatest change in the regulatory landscape that we've seen in the past 70 years.”TOPS ON THE AGENDA
The SRO issue also was on the lobbying agenda of the National Association of Insurance and Financial Advisers at its annual meeting in Washington in September. On NAIFA's Capitol Hill day, approximately 1,000 members met with legislators and their staffs about the SRO issue, tax reform and a Labor Department rule that would significantly expand the definition of “fiduciary” for retirement plan advisers.
The Labor Department rule, which is being rewritten after withering criticism from a wide range of industry groups, also was a catalyst recently for the American Society of Pension Professionals & Actuaries to establish an advocacy group for advisers to 401(k) plans.
A priority for both ASPPA and the IRI is to protect retirement plan tax deferrals, which could be a target in tax reform.
Although Congress is not expected to overhaul the code until 2013, it's not too early for the IRI to spread its message about the importance of 401(k) plans to the nation's retirement system. In talking to members of Congress, Ms. Weatherford stresses the benefits of such plans to a favorite Capitol Hill constituency — small-business owners.
“They use this as the way to build their own private pension,” Ms. Weatherford said.
On the policy front, the IRI also is promoting a bill that would require 401(k) sponsors to outline for participants the amount of monthly income their current balance would generate in retirement, and is lobbying on the Labor fiduciary rule.BUILDING CLOUT
The organization's PAC, although small by Washington standards at $55,000, helps it build its clout.
Since setting up the committee in December, the IRI has made a dozen donations, evenly distributed between Republicans and Democrats. It also has hosted fundraisers for Sen. Orrin Hatch, R-Utah, ranking member of the Senate Finance Committee, and Sen. Debbie Stabenow, D-Mich., member of the Finance Committee, among others.
While there's a healthy debate in Washington over whether campaign contributions can sway a legislator's vote, nearly everyone agrees that they can purchase a meeting.
“I think what you want to do is be at the table with all of your sister trade organizations as we talk about these issues,” Ms. Weatherford said.
In the 2010 election cycle, the FSI donated about $72,000 to political campaigns. It plans to give twice that amount for 2012 races, according to spokesman Chris Paulitz.
The IRI has spent $172,423 and the FSI $180,000 so far this year on lobbying, according to the Center for Responsive Politics. The Investment Adviser Association has spent $160,000 lobbying and donated $38,000 to political campaigns in the 2010 cycle.
Those numbers pale in comparison with some of the larger financial services organizations.
The Securities Industry and Financial Markets Association has plowed $2.7 million into lobbying so far this year and spent $555,000 in last year's political campaigns.
NAIFA has spent $630,000 for lobbying this year and $1.4 million in 2010 campaign donations.
Liz Skinner contributed to this story.
mschoeff@investmentnews.com
