401(k) advisors get a lobbying voice in Washington

The American Society of Pension Professionals and Actuaries last week launched an organization aimed at lobbying elected officials about issues affecting 401(k) plans.

The National Association of Plan Advisors will leverage ASPPA’s lobbying muscle to tackle hefty subjects like fiduciary standards, fee disclosures and whether contribution limits in 401(k) plans should be lowered. See: Why the DOL’s proposed 401(k) rules could ding brokers and leave the spoils to RIAs.

As opposed to ASPPA, its sister group NAPA will consist solely of advisors in the retirement plan arena – either 401(k) plans or non-profit retirement plans. More than 100 retirement advisors have already expressed an interest in joining.

While there are many advisor organizations, there aren’t any that lobby specifically for retirement plan advisors, says NAPA’s president Mary Supovitz, an advisor with Boulay Donnelly & Supovitz Consulting Group, Inc. based in Worcester, Mass. Her firm manages about $250 million in retirement plan assets.

“There was no question that an organization like this is needed,” Supovitz says. “There’s nothing else like it out there. There’s never been any professional society with a strong focus on advocacy representing advisors who focus on employer-sponsored retirement plans.”

On the wrong track

But Phil Chiricotti, president of the Center for Center Due Diligence, says retirement plan advisors should focus on practical solutions for their businesses and that lobbying efforts should take a distant second place. The Center for Center Due Diligence hosts educational conferences for retirement plan advisors and is not a lobbying group.

Phil Chiricotti: advisors should concentrate their
efforts on areas that can generate
positive results for their businesses. I
don’t see that including lobbying.

“Advisor lobbying regarding tax-code changes will not be productive,” says Chiricotti. “The industry needs to get prepared for changes in the tax code.” See: Phil Chiricotti speaks out on broker-sold commissions, RIA fees and heresy.

Chiricotti points out that advisors, chronically short on time, money and margins, need to consider other ways to bolster their business, such as non-profit retirement plans that aren’t yet mature and can be quite profitable for advisors. He adds that advisors need practical guidance regarding the impact of geo-political shocks on retirement plans and how retirement plans may be impacted if the nation’s fiscal health doesn’t improve.

“In short, advisors should concentrate their efforts on areas that can generate positive results for their businesses,” Chiricotti says. “I don’t see that including lobbying.’

New host for 401(k) Summit

NAPA leaders say that even though lobbying will be the group’s primary focus, it will also provide practical training and networking opportunities for retirement advisors. NAPA members and their clients will have access to webcasts, newsletters, government affairs briefing calls and industry expertise. NAPA will launch its first Washington Advisor Update webcast featuring ASPPA executive director and CEO Brian Graff on Oct. 12.

In addition, ASPPA’s annual 401(k) Summit will now be hosted by NAPA and members will receive discounts.

The newly formed organization will have its own committees, distinct from ASPPA’s, consisting of advisors only. The group already has a membership team of advisors and committees are in the process of being formed.

The cost for full membership for an advisor is $395. Advisory firms have the option of joining as Partner Firms. Partner Firms’ membership costs vary based on the size of the firm. Advisors whose companies are partner firms will get the first year of membership gratis, after which they will pay $195 annually.

Defending retirement plans

NAPA intends to have a strong voice in debating such vital issues such as uniform fiduciary standards, fee disclosure and the definition of investment advice under ERISA.

The organization is also bracing itself for the big battle over the future of 401(k) plans. A number of politicians have proposed reducing the contribution limits to such plans and some legislators have even advocated the idea of getting rid of them altogether.

“The key genesis behind this organization is to have a voice in Washington, D.C. for advisors in the retirement plan space,” Graff says. “Advisors in our group are on the front lines dealing with these issues every day and they know firsthand what these 401(k) plans mean to participants.”

Many lawmakers do not appreciate the dire effects that reducing contributions to 401(k)s could have on American workers, says Supovitz.

“A lot of members of Congress don’t understand all of the intricacies of 401(k) plans,” she says. “Plan advisors really have a great perspective on what’s happening in that marketplace and what might really make sense.”