By Holly Yeager in Washington

Opponents of President George W. Bush (news - web sites)'s plans to overhaul Social Security (news - web sites) declared a small victory on Monday when Waddell & Reed, the Kansas-based financial services firm, withdrew support from a business-backed group pushing the reform.

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The decision by Waddell & Reed to leave the Alliance for Worker Retirement Security (AWRS) comes amid mounting evidence of the uphill fight Mr Bush faces in persuading Congress and the public to back his plan. It also shows the tough line organised labour is taking to financial services firms including some that manage union pension funds that labour leaders say stand to benefit from the reforms.

"As the details of the Bush plan come out, and the investing public studies this proposal, opposition is growing and the investment management community is having clear misgivings about promoting a plan that is perceived as a conflict of interest," said Bill Patterson, director of the AFL-CIO's office of investment.

The labour federation had planned a protest rally on Tuesday outside the Hartford, Connecticut, offices of Waddell & Reed, complaining that the firm stood to make large profits by managing the private accounts at the cornerstone of Mr Bush's plan. Instead, they decided late on Monday to move the protest to the offices of Travelers, an insurer in the process of being acquired by Met Life.

Financial services firms have disputed that charge. With a national plan similar to the Thrift Savings Plan, as Mr Bush has proposed, the accounts would generate $39bn in fees over the next 75 years, just 1.2 per cent of the sector's total revenue, according to the Securities Industry Association.

Waddell & Reed, which manages some pension funds, said it had not received client complaints about its participation in the business group. "What we did know was the labour community was not necessarily supportive of us being supportive of AWRS," said Nikki Newton, senior vice-president and director of institutional marketing.

The AWRS, launched by the National Association of Manufacturers (news - web sites) in 1998, is made up of more than 40 trade groups and corporations, including the NAM, the US Chamber of Commerce (news - web sites), the Business Roundtable and Pfizer. With a budget of several hundred thousand dollars, it organises Washington meetings and provides information on pension reform to members of Congress. It was formerly run by Chuck Blahous, now White House point person on Social Security.

Edward Jones, the brokerage firm, had been a member of the group, but decided last month to withdraw.

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