AARP's Conflict of Interest

AARP Leads With Wallet In Fight Over Social Security by Jeffrey H. Birnbaum:

AARP can afford it. The association took in $350 million last year from a variety of royalty-producing enterprises, including insurance, prescription drugs and mutual funds.

AARP is facing criticism of its mutual fund business because that kind of investment would probably be a feature of the accounts the president is pushing. Scudder Investments Inc., a unit of Deutsche Bank AG, handles 600,000 mutual fund accounts of AARP members, with $10.5 billion in assets. AARP helped develop those accounts and earns a small percentage of the management fee that Scudder charges. Last year, the association earned about $7 million from those fees and is working with Scudder to develop more funds, AARP officials said.

"It is ironic that they would make such a fuss about risky investments in Social Security when they actually promote investments in mutual funds," McCrery said. Sen. Richard J. Durbin (D-Ill.), an AARP sympathizer, agreed: "AARP needs to take care that when it's in the policy realm, it declares any conflicts of interest."...

AARP was started in 1958 as a nonprofit organization that also had a business purpose. Its founder, retired educator Ethel Percy Andrus, wanted not only to advance the interests of older Americans but also to create a market large enough to sustain the sale of health insurance to them. That dual role led to accusations of self-serving motives during the Medicare drug debate. Critics asked how AARP could be impartial on prescription subsidies when it made money from a mail-order pharmacy.