Much of the finance industry has lined up to oppose the measure -- big banks with brokerages, mutual fund companies that thrive on clients who roll their 401(k) plans into IRAs, insurers selling annuities, and independent brokers and financial planners.
 
Leaders of the effort include Fidelity Investments, Morgan Stanley, Bank of America Corp., UBS AG and Ameriprise Financial Inc. They’re working together with the five finance trade groups that met with Jarrett, a senior adviser to the president, and Zients, head of the National Economic Council: The Financial Services Roundtable, the American Council of Life Insurers, the Securities Industry and Financial Markets Association, the Financial Services Institute and the Insured Retirement Institute.
 
‘Self-interested Salespeople’
 
A smaller lobbying effort is mobilizing in support of the Labor proposal. The collection of consumer groups, investor advocates and organized labor recently created a website, saveourretirement.com, to educate the public on the issue and encourage them to write to Congress and the White House backing the plan.
 
The site says that “thanks to loopholes in the rules that govern advice about retirement investing, banks, brokers, mutual fund companies and insurance agents are able to portray themselves as trusted advisers while acting as self-interested salespeople.”
 
While they don’t have the financial resources of the other side, the pro-fiduciary groups include large organizations like the AFL-CIO labor federation and the AARP -- associations that could unleash tens of millions of members. The advocates had their own White House meeting earlier this week.
 
Private Lobbying
 
Supporters of the Labor Department said they will be paying particular attention during the OMB review -- a time when the contents of the rule proposal won’t be public.
 
“Our experience has been that industry dramatically misrepresents the content and the impact of the rule, by making unsubstantiated claims” before it is released, said Marcus Stanley, policy director of Americans for Financial Reform, a coalition of groups that advocates for stronger regulation of Wall Street. “You are going to get a lot of fear-mongering.”
 
Tempers have been fraying already, especially after a White House draft economic analysis on the proposal became public last week.
 
The memo, from Council of Economic Advisers chief Jason Furman, argued that broker conflicts and practices like excessive trading to drum up commissions cost workers as much as $17 billion annually. All in all, investors lose five to 10 percent of their long-term savings due to conflicted advice, the memo said, adding that brokers “act opportunistically to the detriment of their clients.”