By Jennifer Dohrman-Alpert
Jennifer Dohrmann-Alpert, managing director of Real Assets Adviser magazine, recently interviewed Doyle Bartlett, founding partner of the Eris Group, and Anya Coverman, senior vice president, goverment affairs and general counsel under the IPA staff, to discuss the power of policy and advocacy within the broader alternatives space. The discussion aims to highlight the importance of advocacy and outreach with a particular focus on the IPA’s efforts in this regard.
The IPA focuses on two distinct areas of policy advocacy — legislative and regulatory.
What has the IPA achieved over the past few years in building its brand on Capitol Hill?
Doyle Bartlett
We’ve worked hard on outreach to both targeted members of Congress and our industry coalition partner organizations. The Hill Days have brought people to town to meet with their members of Congress and the Senate who are critical to our industry and the IPA agenda. And importantly, members and staff of the committees critical to our legislative agenda are informed now about the importance of PDI products and the industry in general.
Anya Coverman
I began at the IPA last September, and since then the visibility and presence of the IPA has continued to grow. We have a strong presence in Washington, D.C., not only in the halls of Congress but within the regulatory agencies. Our work to build our brand will continue over many years.
In terms of legislative outcomes for the PDI industry, what was different in 2017 versus previous years? What was achieved?
Doyle Bartlett
I think we had several major accomplishments in 2017. Our primary accomplishment came as the result of the tax reform bill that was passed by Congress and signed by the president. We exerted a lot of effort over a long period of time to preserve the 1031 Like Kind Exchange for real estate, and that prevailed in the final bill. We also worked to preserve the deductibility of interest for businesses, particularly real estate businesses, and that was protected in the final bill as well.
We worked on several securities bills that are of importance and, for the first time, seeing real movement now. The BDC Modernization proposal would, for the first time, modernize the way business development companies operate, allowing for greater leverage and other improvements. That bill now has bipartisan support in the House and Senate and is likely to be enacted in 2018.
Anya Coverman
The discussion of a uniform fiduciary duty has been a perennial issue within the regulatory landscape. The IPA was very active over the last year as the DOL fiduciary rule took effect. An accomplishment was supporting the effort to delay full implementation of the DOL fiduciary duty rule. The IPA contributed its voice to a larger coalition of financial services firms and organizations to convey that the rule would have harmful, unintended effects, including impacting smaller investors and commission-based products.
Why was the delay so important?
Anya Coverman
One of the most concerning provisions of the DOL rule was the litigation risk associated with the BICE private right of action, as well as compliance and implementation challenges. Under the Administration’s directive, the Department of Labor will take a fresh look at the rule as a whole. The SEC is also working toward a rule proposal, which we may see as early as this year.
Doyle Bartlett
The regulatory burden that the rule placed on financial advisers and broker-dealers was so high that they were considering dropping PDI products from their offerings. The delay and the assurance from the Department of Labor that, in coordination with the SEC, they are going to go back and re-examine the rule was huge. Once Chairman Clayton was confirmed to lead the SEC, that re-energized the effort to ensure that the SEC and the DOL are working toward a harmonized standard of care that will work for all products and investors alike.
The legislative process can be a long and winding road. Why is it important to remain focused on the important issues, even when it seems there is a lull in the action at times?
Anya Coverman
Effective advocacy, whether on an individual or group basis, is not just about shaking hands nor is it a project-by-project activity. Advocacy, both regulatory and legislative, involves a proactive, long-term effort. You don’t want to advocate for an issue only when a negative headline comes out — that is often too late. An organization has to remain active even when there is a lull, and that demands a long-term strategy and effort. Education is a critical component to advocacy that involves building trust and relationships.
Doyle Bartlett
To truly be effective in advocacy, particularly at the federal level with 535 members of Congress, the entire administration and other influential organizations, you have to develop and nurture relationships over the long run. When you continue to build relationships, those people become knowledgeable and educated on your issues and can ultimately move into leadership positions. You never want the first time you talk to a policymaker to be when you’re going into a crisis. You should have already been in there before, educating and informing and laying groundwork, so you can lean on that existing relationship when needed.
Talk about partnering with other trade associations on bigger, broader issues. Is there strength in numbers?
Anya Coverman
Yes. While every association may have a slightly different focus, there are also many similar, overlapping goals. Working with other trade associations allows you to leverage resources, information and expertise. It is also important to understand views of associations that take different positions. The more that legislators and regulators hear directly from associations such as the IPA, and our partner coalitions, the more that helps set the groundwork for future success.
Doyle Bartlett
It really leverages the IPA’s resources to work with coalition partners like the National Association of Realtors, Nareit, SIFMA, FSI, the FEA or the U.S. Chamber of Commerce. We’re able to amplify our advocacy to bear on the big issues. A great example of that happened when the first DOL proposal came out. Many don’t remember, but REITs and other PDI products were not on the list of permissible investments. But working with our coalition partners at SIFMA, FSI and the Chamber, we were able to make sure that issue was addressed in each comment letter by all organizations. So the DOL heard collectively that it was a problem to not include PDI products on their list. Ultimately they chose, which was the right choice, to simply eliminate the list altogether. The IPA couldn’t do that alone. Part of our strategy was to get our coalition partners to advocate on our behalf, and it was a great example of the effectiveness of coalition advocacy.
The IPA Hill Day continues to grow, with last year’s participation including more than 200 IPA members. Why is that event important, and what is achieved from the face-to-face interaction with members of Congress?
Anya Coverman
The most important political participation is a face-to-face meeting with your member of Congress, letting them get to know their constituents and what issues they face as citizens or businesses in the state or district. It is equally important to meet with staff in a member’s office that may be working on a discreet issue of importance to you.
Doyle Bartlett
The Congressional Management Foundation surveys members of Congress on communication effectiveness, and consistently 80 percent of the members and their staff say the number one most persuasive tool is a meeting with their local constituents. If a member of Congress is undecided on an issue, the number one thing that influences them is not party or philosophy — it is a visit from a local constituent who discussed the issue. The face-to-face interaction is critical.
Let’s talk about the IPA’s Policy and Government Affairs Committee. How does that group decide the issues the IPA should focus on?
Anya Coverman
As with any membership association, we have committees of volunteer members who want to participate and focus on certain issues. In January, we host IPA’s Policy & Government Affairs Committee Planning meeting, where we take an in-depth, detailed look at the industry. We review what we accomplished over the previous year and decide on new issues to work on over the coming year. It is a productive way to have IPA members come together in person and talk amongst each other to create a strategic plan over the next year.
Doyle Bartlett
Volunteer participation in the IPA Policy & Government Affairs Committee has been absolutely critical to informing our advocacy efforts. Getting real feedback from real market participants on how some of these issues would impact their businesses is essential. The committee and its leaders — Kamal Jafarnia at Provasi and Dan Wagner at Inland — have been critical to focusing on the right priorities and making sure that we’re working on the most important items to the industry at any given time. It keeps us on track to make sure that we are all moving in the same direction.
Anya Coverman
A membership association exists because of its members, so the work we do is driven by their needs and concerns. This Committee helps informs our IPA staff, and we turn that into policy actions.
What are the top policy and advocacy issues that came out of that meeting for the IPA going forward?
Anya Coverman
This year we came out of the meeting with both aspirational goals and strong policy positions. We will continue to focus on the DOL fiduciary rule, but will also focus on potential SEC fiduciary rule making. As the states are also considering fiduciary rules and legislation, we will stay proactive in pushing for one uniform, national standard as opposed to conflicting and potentially duplicative state standards. We will continue our work on securities rule reforms and push for state adoption of e-signature guidelines and industry-wide straight through processing. We also discussed some important policy goals such as paperwork reduction and opening new markets for our products, such as through defined contribution plans.
Doyle Bartlett
The one thing I would add is the access to new markets, which is really being proactive. The potential to open up our products to defined contribution plans is a great opportunity for the industry. If we can really push that issue forward it will open up a whole new group of investors. With that kind of long-term thinking we can plan our resources to pursue these important issues over time.
Given these new charges for this year going forward, what are the tools and tactics that the IPA will deploy to achieve these policy goals?
Anya Coverman
We will continue to focus on proactive engagement, education and collaboration, both on Capitol Hill and with regulators. We will continue to comment on regulatory proposals, which is also an important part of the policy process. We will work on our policy priorities and, when necessary, exercise our grassroots tools to empower our members.
Doyle Bartlett
Proactive communication is critical. The IPA’s enhanced efforts on the communications side have improved our operating environment in the policy arena. The integration between our direct advocacy and our public and member communication lays the groundwork for our legislative and regulatory priorities to create a positive response from policymakers.
What are the ways that IPA members can best get involved?
Anya Coverman
We encourage IPA members to join committees that interest them. Many committees work on similar issues from different perspectives (policy versus technical or operational, for example). We encourage our members to attend our January policy planning event, and we encourage everyone to come to the IPASummit and Hill Day. Not only is it a day to meet with your Congressional delegates, but we also have educational speakers, and it is a great opportunity to network with other IPA members.
The IPA recently established its own Political Action Committee — IPA PAC. What is a PAC and why is it an important step for the IPA in terms of strengthening the industry?
Doyle Bartlett
A Political Action Committee — or PAC — is a legal conduit to provide campaign donations to members of the House and the Senate who we believe can aid our policy agenda. It is a major step forward for the IPA and its members. Now we have the ability, through IPA PAC, to show our support for those members who have supported the PDI industry. It will be a critical tool for the IPA going forward to deepen our relationships with members who are our champions. There will also be new members we need to educate on our issues, so it gives us another avenue there. This is something we have talked about for a long time, and I think it will help the IPA continue to expand and deepen its advocacy efforts.