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Now come on, this isn't just a NML failing. Most "independent agents" don't know that they really are an agent of the company and not a broker and where their legal responsibility lies.
Another Major LTC Player Making Sweeping Changes
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Now come on, this isn't just a NML failing. Most "independent agents" don't know that they really are an agent of the company and not a broker and where their legal responsibility lies.
Please tell me what I am apparently doing wrong in your eyes. Apparently by selling NML LTC people are implying that I am unethical and I will get sued one day and lose in court. I find this very laughable as I follow the CFP board financial planning process. So if you would like me to list out the six steps I can.
I simply said you should not imply you are acting as a fiduciary when you sell a commission based product. None of us can imply we are acting as a fiduciary in this situation.
Here is part of an article That quotes one from your very own Boston Law professors. You can find the full article at:
http://www.liftburden.com/Complinet 0909 Fiduciary.pdf
"Tamar Frankel, a professor at Boston University School of Law, says commissions can exist in a fiduciary relationship – provided clients are informed about the fees they pay to their broker, as well as the fees the broker receives from other parties. "A fiduciary must earn a living," she says in a Wall Street Journal online article dated August 3, 2009."
Here is an article that talks about some of the changes due to the lovely Dodd-Frank bill
Full article found at:
The Dodd-Frank Fiduciary Controversy | peoriamagazines.com
What is a fiduciary? In practical terms, a fiduciary relationship represents the highest standard of customer care imposed by either equity or law. A fiduciary owes a duty of loyalty to its clients and is expected to be above reproach in carrying out its duties. A fiduciary must not put its personal interests before its clients, and it may not profit from its position as a fiduciary without the consent of the person to whom it has pledged these fiduciary duties.
The SEC’s Office of Compliance Inspections and Examinations further identifies five responsibilities of fiduciaries:
To put clients’ interests first
To act with utmost good faith
To provide full and fair disclosure of all material facts
Not to mislead clients
To expose all conflicts of interest to clients.
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Maybe this doesn't apply specifically to insurance as it does with investments...I am not sure, and to be honest the more i look at it the more confusing it is. But I do know that I run my practice on investments the same as in insurance. I put my clients needs before my own. So i will concede the point that maybe the word fiduciary shouldn't be used, but NOT because of commissions being earned. There just doesn't seem to be as much information on the insurance side of the business.
When I enter into a planning relationship however, it seems that the CFP standards would hold me accountable in all of my recommendations as a fiduciary anyway, so I have always taken the stance that I am acting as a fiduciary. So you can disagree with my reasoning of why I use some products with higher premiums and other times I don't. But my case notes will show you every time that it is in the clients best interest that I design a plan.
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On a side note, this has been a fun conversation. Thanks to everyone who played nicely, and thanks anyway to those who played not so nice
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LTCAdvisor,
I know you like Clark Howard, here is his most recent honor roll of companies to buy LTC from:
Long Term Care Insurance Honor Roll | www.clarkhoward.com
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That's all?
The dividends will only decrease the premium by 30%?
That's it????
That means that in your "best case dividend scenario" the policy is still priced about 40% higher than the rest of the market.
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Arthur, they've already had a premium increase.
It's called charging 70% more than most other companies.
What's better, paying 70% more now OR buying a policy that costs less now and may get an increase later.
captive agents have to have convoluted logic because it doesn't make sense to pay 70% more for the same benefits with the hopes of it going down 30% with the dividends.
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well stated, Jack.
One of my producers did a 10-pay quote for a client of his in PA recently. The client came back and said that the policy his financial advisor was quoting was cheaper.
The "advisor" (a captive agent with a large mutual insurance company) compared a "life pay" policy to my producer's 10pay policy. What's shocking is that the lifepay policy was only about 10% cheaper than the 10pay policy.
When doing an apples to apples comparison with all the benefits and riders, the mutual policy was over 300% MORE than the other policy for the lifepay premium. Yes--more than three times the cost.
Needless to say, the 10pay policy was a no-brainer.
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Personally, I feel it might make sense to do a 10 Pay with company A vs a lifetime pay with company B, especially when the premiums are relatively close and your clients are under the age of 65.
How can you justify acting as a fiduciary and not giving your client the 10 pay option immediately, and encouraging them to do it?
How can you justify acting as a fiduciary and not giving your client the 10 pay option immediately, and encouraging them to do it?
Scott, looks like I was typing my 10 pay comment as you were typing yours.
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WOW.
$94 per policy!
That is amazing.
"Honey, we can go out to eat at Denny's tonight."
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what amazes me is that you don't see how hypocritical this is.
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This truly isn't meant to be argumentative, but what are you defining as the rest of the market? I will give you that Genworth can be very cheap, but I have run many spreadsheets with many companies, and NML just isn't anywhere near 70% higher than the rest of the market, nor 40% higher after the dividend. They are a tally very competitive especially with the dividend.
As far as the 10 pay example you gave is concerned, you just did the same thing that you were complaining about. You compared your 10 pay to someone else's lifetime pay. Compare 10 pay to 10 pay or lifetime to lifetime.
Personally, I am still on the fence about 10 pays, I like the fact that they should lock out your future rate increases and reduce your cash outlay in retirement, but many times the amount you put into them over those 10 years, and the lost power of those dollars doing something else over a lifetime is still hard for me.
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