LPL Financial Government Relations Leaders Discuss Advocacy

Each year, LPL identifies key policy initiatives based on the impact they have to advisors, the firm and the industry. In this podcast, hear from LPL Government Relations leaders Peggy Ho, executive vice president, and Nicole Petrosino, senior vice president, discussing their advocacy work in Washington D.C. and across the country to raise awareness and provide LPL’s position on key issues impacting the financial services industry.

They share why relationships matter in Washington, LPL’s role to affect outcomes on issues such as tax reform and the Senior $afe Act, and how advisors can get involved.

Related Links:

• LPL Lobbies to Improve Retirement Plan Access
• LPL Advocates for Protecting Senior Investors

To learn more about LPL Government Relations and to get involved, visit lplgovernmentrelations.com

The views and opinions expressed by the LPL Financial representatives are as of the date of the recording. The views are not indicative of future performance or success. LPL Financial cannot be held responsible for any direct or incidental loss incurred by applying any of the information offered.

Read the full transcript below:

Hello, I’m Samantha Davison with Corporate Communication and I’m joined today by Peggy Ho, executive vice president, Government Relations and Nicole Petrosino, senior vice president, Government Relations. Today we’re talking advocacy and what LPL is doing to influence the issues impacting our industry, our advisors, and their clients. Thank you for taking the time to talk today.

So let me begin by asking a basic question – what is Government Relations? Can you give us an overview of what you do and why it’s important?

• One of the phrases we use a lot is, “if you’re not at the table, you’re on the menu.” What we mean by that is there are decisions being made every day by policymakers at many levels – local, state, and federal – and these decisions have consequences, some intended and some unintended. If we – as one of the largest financial institutions in the country – are not participating in these policy decisions, then we are missing the opportunity to proactively shape our future and we are potentially opening ourselves up to a lot of risk.
  
• I like to say that advocacy and government relations are all about building relationships and then leveraging those relationships to educate and influence. Our team works hard to identify the key players both in Washington, DC and in the states who are developing laws and regulation that can impact our business. We build relationships with them and familiarize them with LPL, who our advisors are and who we serve. And with those relationships, we’re able to serve as resources to help inform some of these policy issues and direct them in a positive direction.

2. How do you determine which issues to focus on?

• We look at issues through three lenses to determine the relevance to our business and the priority of the issue within our advocacy agenda. The three lenses are (i) impact on our financial advisors, (ii) business and financial impact; and (iii) thought leadership opportunity. Guiding questions we ask include whether or not the impact of the issue is unique to our business – if so, we are more likely to adopt it as a key issue. If public engagement on an issue will create an outsized negative perception, we may decide not to fully engage, but perhaps work through a trade association. 
  

3. Nicole, let’s talk about the nitty gritty. What’s a day in the life of a lobbyist like?

• Well, as Peggy said, building relationships is key to my job. I participate in a lot of meetings and coffees to familiarize Members of Congress and Congressional staff with LPL. I spend a lot of time going to relevant hearings and markups on the Hill to make sure I’m fully aware of the issues being debated. I also attend fundraisers for Members of Congress before work, during work, and after work – these are opportunities for me to get time, often one on one, with a Member of Congress to continue building our connection.  All of these exercises play an important role in the life of a lobbyist. Bottom line, you don’t want to wait for something important to come up and then go to these people to ask for help. Having a pre-existing relationship is extremely helpful, if you need to make a request.  
  

4. And once you actually have that request – or that issue you want to pursue, what do you do?

• First, I’ll try to see which Members of Congress or Congressional staff have already expressed an interest in that issue. If there is a match, I’ll meet with that Member or staffer to provide our thoughts and perspective. Sometimes, if there is a proposed piece of legislation and the issue of particular interest to us, I’ll offer to have one of our executives send a letter of support, which is always appreciated. We’ve done this in several instances recently in support of the Senior $afe Act, which passed into law and of legislation related to the Consolidated Audit Trail, which is a regulatory mandate put forth by the SEC.
  
• In some instances, if the issue is something that only we care about, I’ll spend more time shopping the idea around to Members and Congressional staff that I think might be interested. In these situations, it really helps to know what these Members care about – I spend a lot of time making sure I am connected with them and aware of their concerns.

5. Does it ever get tricky?

• Well, as an example, during something very complex like tax reform – which happened very quickly last year – I was trying to be proactive on a number of issues. But sometimes in this job, I also need to express opposition regarding a certain item or piece of legislation within the package. Usually, these problematic proposals come from certain Members of Congress that don’t surprise you – and I’ve learned how to walk the line. On occasion, however, a Member of Congress who has been extremely helpful to us in the past can propose an idea or a bill that the firm is opposed to, so trying to figure how to maintain that relationship while opposing their bill can be a delicate manner.
  

6. Can you describe some of your recent wins?  Where has our advocacy been effective?

• Nicole just mentioned the tax reform package – we worked very hard and very quickly on a number of issues that were important to us in this landmark piece of legislation. In particular, we were happy with how things turned out:
  • Not only was the corporate tax rate reduced to 21%, but we were able to protect a corporation’s ability as a corporation to deduct interest, subject to a cap, which left our firm in a good position.  
  • We successfully prevented “Rothification” from appearing in the tax package, which means that Americans can continue to save into their retirement plans on a pre-tax basis..  
  • We were able to prevent the addition of a "first-in, first-out" rule that would have applied to the selling of equity securities.  
  • We protected our advisors' ability to deduct a portion of their pass-through income if they run their businesses through pass-through entities.  
  • We ensured that there was no impact on our advisors' independent contractor status.
• Another recent example of our advocacy is the passage of the Senior $afe Act. We are proud that we were champions of this legislation from the start – we worked closely with the bill sponsors in the House and the Senate to build support and push this forward. And at the end of the day, the passage of this bill means that our advisors are better able to protect their most vulnerable clients from harm.

7. What are some of the other issues that you’re currently working on?

• The fiduciary or “best interest” issue is something that we’ve been working on for years, and continues to be on our agenda. Right now, as everyone knows, we are reviewing the SEC’s proposed Regulation Best Interest. We’ve submitted our comment letter, and I’ve been keeping our allies on the Hill informed of our position on the issue. Not only is this something that we are working on at the federal level, but we are monitoring the activity in the various states as well. For example, Nevada passed a fiduciary law last year and we are still waiting for interpretive regulations to be promulgated.
  
• Retirement security is another big topic – as everyone knows, Americans are not saving enough for their retirement, and we need to promote policies that make it easier for people to save. One recent example of our engagement is our public support of Senator Collins’ efforts to increase the limits for SIMPLE IRAs – this would allow people to save more money using this type of vehicle. 

8. Can advisors get involved in this work?

• Yes! Having advisors in all 50 states definitely helps with our advocacy efforts. When I go into meet with an office, I can always connect the issue to the Member’s home district by talking about how many advisors we have in their district or state. Members of Congress love connecting with their constituents, and we have had great success helping our advisors build relationships with their Members of Congress. 
  

9. What are some examples of how advisors can engage?

• We are always looking for advisors who would like to build relationships with their members. One way we do this is to host in-district meetings. These are meetings that a member of Congress will hold when he or she is home in his or her district. Most recently, we hosted a meeting with Congressman Josh Gottheimer in New Jersey, and we were able to bring about 12 of our New Jersey advisors to meet him. We’ve done similar events in many states around the country.
  
• We also have advisors who are interested in hosting fundraisers for their members of Congress.  This is obviously a larger commitment, but it goes a long way to building that connection with the Member. Our team is always happy to help an advisor who wishes to do this. 
• For advisors who are very engaged with us, we will invite them to our annual fly-in in Washington, DC. This is a tremendous opportunity where we bring a group of advisors to meetings on Capitol Hill.  The connections we are able to build between LPL advisors and members of Congress is really priceless.
• Finally, we have our own political action committee, the LPL PAC. We’re really proud to say that we’ve been able to build a very strong PAC, with the help of our eligible employees and advisors. 

10. Let’s talk about that.  Why is having a PAC so important?

• The short answer is that federal regulations prohibit companies like LPL from making campaign contributions directly to federal candidates, but through a PAC, we are able donate to legislators running for office. We can raise money from our eligible employees and advisors, and we use 100% of these dollars to support candidates for office. These contributions help us build relationships with those in Washington who can help shape our industry. Having a strong PAC really augments the impact of our advocacy efforts.

11. I understand that the Government Relations team is launching a formal 50 state advocacy network.  Can you tell us about this?

• Yes! This is something we’re really excited about.  As we’ve already mentioned, one of our biggest strengths is the fact that we have advisors in all 50 states. Basically we have a natural grass-roots network.  So we are establishing a formal 50 state advocacy network that will harness the strength of all of our advisors and employees. Through this network, we will have our advisors and employees develop and maintain relationships with policy makers and serve as a resource to these policy makers by providing their first-hand “ear-to-the-ground” knowledge;
• We really believe this network will benefit the financial services industry as a whole – we can  serve as a “force multiplier” – providing accurate first-hand knowledge and proactively collaborating with policymakers to support the development of thoughtful law and regulation.  And we’re excited because we think this network will help us facilitate the active engagement of our financial advisors and employees and enable them to make a difference, so we welcome anyone who is interested to reach out to us.

Thank you Peggy and Nicole for spending time with us and sharing insight into the great work the Government Relations team is doing. If you’d like to learn more about our advocacy efforts please visit lplgovernmentrelations.com.