As the Obama administration reached the end of its nearly six-year battle with financial firms over setting tougher rules for brokers who handle retirement accounts, an emissary went up to Capitol Hill to smooth the way for the rollout.
AARP, in a meeting with Democratic congressional aides last month, stressed the policy’s importance to its millions of retiree members, according to people briefed on the gathering. The more significant message, however, was left unsaid: lawmakers besieged by industry pushback should keep in mind there was an equally powerful lobby on the other side.
AARP’s leading role in advocating for the Labor Department rule that makes brokers put clients’ interests ahead of their own was no accident. The administration, seeking to cement a legacy of being tough on Wall Street, spent months trading information and coordinating with the group as it campaigned for the plan, hundreds of pages of e-mails obtained from the department under public records law show.
The collaboration -- which opponents decried as overly cozy -- included AARP and Labor staff discussing guest lists for events, writing questions for an appearance in Miami by Labor Secretary Thomas Perez and strategizing on how to plant positive media articles. President Barack Obama himself announced the policy’s revival last year at AARP’s headquarters in Washington. And last week after the rule’s completion, he wrote the group a thank-you note.
The alliance helped resuscitate the regulation after many thought it was dead in 2011 due to vociferous lobbying by banks, brokerages and insurers. AARP’s muscle will also be important going forward, supporters say, as the industry tries to get Congress or the courts to reverse one of its biggest losses since the Dodd-Frank Act passed in 2010.
“The AARP is its own country,” said Knut Rostad, president of the Institute for the Fiduciary Standard, who has called for the stepped up protections for years.
The new rule, which brokers must fully adopt by January 2018, requires advisers to act in the best interests of their clients, an obligation known as fiduciary duty. Previously brokers could recommend investments that they believed were merely suitable.
Labor Department spokesman Michael Trupo said input from a broad array of groups led to a strong regulation that also minimizes burdens on industry.