Top financial lobbyists converged on the White House last week in a failed bid to forestall an administration plan that would impose new rules on brokers who manage trillions of dollars in U.S. retirement accounts.
At issue is a Labor Department proposal to require brokers to act in their retirement clients’ best interest, a standard known as fiduciary duty.
On Jan. 23, five association heads -- among them two former governors and an ex-congressman -- gathered to tell presidential advisers Valerie Jarrett and Jeffrey Zients that the rules would throw the retirement system into chaos and harm savers with small balances, according to attendees and people briefed on the meeting.
The executives pledged to work with the administration and address its concerns that retirement savers are losing billions of dollars through high fees and questionable sales practices, these people said.
The Labor Department plans in the coming days to send the proposal for a final administration review, according to people familiar with the matter.
The rule is a lightning rod for what promises to be one of the biggest Wall Street lobbying efforts of the year, a fight over a business that impacts anyone with an Individual Retirement Account or 401(k) plan. The White House has signaled it will put its full heft behind the plan, and the battle is already growing nasty: an internal memo, described last week by Bloomberg News, highlighted what officials called brokers’ abusive trading and conflicts of interest.
‘Really Stunning’
“It’s really stunning that this is the view that the administration, at the very highest levels, has of an entire industry,” said Francis Creighton, the head of government affairs at the Financial Services Roundtable. His boss, former Minnesota Governor Tim Pawlenty, attended the White House meeting last week.