An Obamacare equivalent that would do to retirement what has occurred in health care represents a potential “existential” threat to financial advisors, who need to actively lobby lawmakers in their districts.
So said Financial Services Roundtable (FSR) chairman Tim Pawlenty in an address Tuesday to some 5,000 attendees of LPLFocus, the broker-dealer’s annual advisor conference in San Diego this week.
Proposals to have the government assume responsibility for workers’ retirement savings “are now under study at the state level, but could pose an existential threat to the kind of services you’re trying to provide,” said Pawlenty, whose Financial Services Roundtable is a lobbying organization representing the 100 largest integrated financial services companies, including LPL.
A government takeover of private retirement savings accounts was just one scenario Pawlenty, a former Republican governor of Minnesota and presidential candidate, warned advisors of.
Another proposal would eliminate tax preferences for the retirement savings accounts of higher-income Americans.
He also cited the Department of Labor’s fiduciary proposal, which he said could have the perverse effect of making access to financial services less affordable to middle-class Americans.
Pawlenty told the advisor audience that the partisan divide in Washington makes government dysfunctional in a way that was not the case back when Ronald Reagan and Tip O’Neill were “fighting by day and drinking [together] by night.”
Despite their reputations, Reagan as a staunch conservative and O’Neill as a liberal politician of conviction, both men were “pragmatists who got things done,” Pawlenty said.
Today’s gridlock, he said, is the effect of gerrymandered political districts, which assure safe and comfortable general election campaigns that heavily favor the incumbent but, in contrast, volatile primary elections that have incumbents looking nervously at “their left or right flanks.”
Pawlenty pointed to former House Majority Leader Eric Cantor as a recent illustration of this phenomenon.
“Cantor had about a zero chance of losing in the general election until a relatively unknown college professor [Dave Brat] took him out” in an upset primary victory in June.
The fear of ideologically purer candidates in both parties has the effect of limiting interparty cooperation, he said.