Look into the data on lobbying by the financial industry and the numbers are astounding. Big stock brokers are spending millions to sway lawmakers to see things their way.

“Their way” means keeping fees high and responsibilities low. The stock brokers would vastly prefer, for instance, to keep a potential new rule on fiduciary duty from seeing the light of day.

If enacted, the rule would force brokers to disclose their conflicts of interest to clients before doing business. Their hope seems to be that by lobbying hard they can smother the proposed rule in the cradle, just like they did a few years back.

How many millions? The Center for Responsive Politics spells it in plain dollars and cents. In just three months this year:

  • $1.98 million by the Securities Industry and Financial Markets Association (SIFMA)
  • $1.28 million by the Investment Company Institute, which represents the mutual fund industry
  • $721,220 by the National Association of Insurance and Financial Advisors
  • $213,524 by the Financial Services Institute, which is independent broker-dealers and financial advisors
  • $210,000 by Financial Industry Regulatory Authority (FINRA)

Meanwhile, the Financial Planning Coalition, a combination of several smaller groups in favor of Labor’s proposed rule, has spent all of $10,000 — the sticker price cost of a small car. The Investment Advisor Association spent $40,000, perhaps a really nice car.

That huge gap is telling. It’s not that the planners want the rule less than the brokers. It’s that they have much less to spend on lobbyists, which as you can imagine do not come cheap.

Perhaps you might wonder why their lobbying budget is so minuscule, but the answer is easy enough. Planners have less to spend on lobbyists because collect far less in fees.


Not only do the planners have less money to blow on fancy D.C. suits, they also have no reason to fight change. By and large, they already operate under the fiduciary rule. Only Wall Street is at risk, should the proposed rule become law.

The big pushback from the stock brokers has, so far at least, taken this form: “Look, if you cut off our high-fee model, that just means the mom-and-pop investors of the world won’t get good advice.”

The logic is compelling, I suppose, to elected politicians. What will small investors do without commission-driven salesmen to help them! Think of the jobs back in my district that exist because of high advisory fees. I can’t just vote to demolish a part of our local economy!

The trouble is, investment models that support large numbers of financial salespeople earning commissions is not cost-free. It comes right out of the retirement balances of constituents, ordinary savers who largely don’t notice those high costs — until retirement comes and the cupboard is bare.

It’s often said that the easiest way to understand Washington is to follow the dollars. It’s the same on Wall Street.

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