There will be a “feeding frenzy” among financial institution independent/field marketing organizations (IMOs/FMOs) going after a pool of insurance-only agents as the industry prepares for implementation of the DOL Fiduciary Rule.
This according to Brokers International President and CEO Mark Williams, who addressed the topic during a recent webinar wrapping up the company-hosted National DOL Ramifications and Decisions Conference (pictured at right), held at the new Brokers International headquarters office in Des Moines, Iowa in late December.
Williams pointed out that insurance-only agents – licensed producers that do not maintain a securities license or investment advisory registration– will have to align themselves with one single “financial institution” that will sign their Best Interest Contract Exemption (BICE) along with the agent’s client.
Many insurance-only producers work under an IMO/FMO umbrella for marketing support, and are unfamiliar with regulators beyond the state insurance department.
Insurance-only agents will only be allowed to have one financial institution sign the BICE – not multiple FMOs. This means competition among financial institution FMOs will certainly heat up to align with as many insurance-only agents as possible. If insurance-only agents don’t have a supervising party to sign the BICE, they effectively lose the opportunity to sell indexed annuities purchased with qualified money.
“Our priority is to work closely with our carrier partners to help agents and IMOs understand and properly implement the business changes contained in the DOL rule,” Williams said. “While it will be critical for all of us to follow the rule, we want to make it as seamless as possible for our agents and their customers.”
Williams noted that while many have already applied, no FMO has yet been granted “financial institution” status. While approval is expected soon, all are still waiting on direction from the DOL.
In Fall 2016, the DOL issued a set of FAQs regarding the Final Rule, which clarify that PTE 84-24 and the full BIC Exemption allow insurance intermediaries, such as independent marketing organizations (IMOs/FMOs), to distribute insurance products through independent insurance agents and to receive insurance commissions.
While IMOs do not fall within the scope of the term “financial institution” as defined by the full BIC Exemption, the BIC Exemption includes a process for IMOs to apply to be treated as a “financial institution” with responsibility for executing the best interest contract and compliance with the BIC Exemption’s requirements.
This was just one of many topics covered at the conference in Des Moines. The focus of the one-and-a-half-day event was to share information and ideas about how to best support insurance agents who will be operating under the DOL rule with turnkey solutions and guidance, in effect keeping them ahead of the latest updates, changes and direction they are getting from the DOL and carriers in order to minimize business disruption upon implementation.
Many IMOs attended the conference, representing thousands of agents nationally.In addition to industry leading IMOs, the conference was also attended by high-level representatives of annuity carrier partners including Allianz Life Insurance Company of North America, Athene, American Equity, EquiTrust, Great American Life, Fidelity & Guaranty Life, Legacy Marketing Group and North American. The carrier representatives volunteered their companies’ perspectives about how each is approaching the rule change — generating a very insightful discussion.
Mark Williams was joined in the presentation by Julie Wagner, Brokers International Chief Compliance Officer; Matt Corbett, Director of Risk Management; leaders of the DOL compliance initiative within BI; and the team of compliance consultants responsible for implementation. Additional topics covered included areas such as:
• The requirements of becoming a Financial Institution and the steps Brokers International has already taken to apply for Financial Institution status. (Financial Institution status has not been granted to any FMO as of yet; potential approvals are expected at any time).
• Determining approved carrier and product lists and business-model changes imposed by DOL regulations.
• Minimizing potential compensation structure changes and how marketing dollars will be handled.
In the post-conference webinar, Williams said Brokers International is expecting a relatively “flat” year in 2017, and is forecasting a 10-15% decrease in revenue. He also noted that most carriers are doing away with agent bonus compensation, and incentive trips are going away. Trips moving forward must be product-agnostic and will be more training-oriented.
About Brokers International: Brokers International is one of the industry’s largest retirement and investment marketing organizations — providing annuity, life insurance and wealth management solutions to independent insurance professionals and financial advisors across the nation. Headquartered in Urbandale, Iowa, Brokers International is a recognized leader in wholesale-driven distribution.
• Insurance-only licensed agents – are you aligning or planning to align with a single “financial institution” IMO that will sign your BICE? Sound off on this new thread: Insurance-only agents being courted by IMOs?
• SEE ALSO: DOL releases Fiduciary Rule FAQs