Broker Dealer For Small Part Time Reps?

InsuranceBrah

Expert
40
So I'm not sure if i'm asking this in the right spot, but I'm sure others might be able to answer.

We all know that Securities and Insurance have a very close nit relationship. I don't like leaving money on the table when I close an Annuity and the client also wants 100k in bonds/ETF and All I can say is "go to vanguard".

Here's the thing. I'd like to break into securities. But it's not my main business, and I don't spend all my time going after acquiring Assets. But working in the final expense markets and dealing with retirement accounts does mean I have access to assets. Who knows the future of annuities in qualified money especially with the DOL coming through.

I thought about just going the series 65 route and finding a custodian. But that seems even harder if you don't have millions under management. From my understanding custodians want to see exponential growth. Again this isn't my main market. If I make enough to cover compliance costs with decent growth I'd be happy. Custodians, not so much.

So are there any Broker Dealers out there who will sponsor you for the 7/66 (I'll pay for it if I must) and offer a platform to work with where i don't have to worry about busting my ass and putting my insurance business on the back burner to cover. I don't need much support besides dealing with compliance issues, and Again when the time comes I'll just have to cover these costs out of pocket. Let me know If you guys have any suggestions.
 
What about being an IAR for another RIA? There are a few out there that are "insurance friendly" and you don't have to have the B/D compliance hurdle.
 
What about being an IAR for another RIA? There are a few out there that are "insurance friendly" and you don't have to have the B/D compliance hurdle.

You mean like another RIA firm works with the custodians to hit the minimums allowing me to park my business with them? I wouldn't be opposed to that.

One of the major issues I've ran into out here in flint is I can never find what I'm looking for so I've just always done everything on my own. I spent a while looking for a good independent agency before saying screw it and just going it alone. I guess I'm in the same boat here. Not a lot of RIA's around me outside of the countless CRIA advisers.

I guess that's why I thought the Broker Dealer option would be better.

----------

I guess Brokers Alliance has an RIA platform. Has anyone had any experience with that?
 
The cost of E&O, compliance headaches, and now the DOL fiduciary issues make this something that a lot if us that wee registered reps found not worth it. There are more former RRs on here than you can shake a stick at.
 
Well... the new problem is that the BICE requires it to be signed by the agent/advisor and the financial institution. If you're an independent agent... exactly WHO is the financial institution? Insurance companies don't necessarily want that kind of oversight. They'd rather remain "product manufacturers".

At least if you're with an RIA or a broker/dealer... you do work for a financial institution. Independent agents don't have one, unless IMOs file for such status... somehow. This would also create more of a 'captive' situation for all your qualified annuity business so you can be "supervised" in your recommendations.

https://www.kitces.com/blog/best-in...tion-bice-and-dol-fiduciary-bic-requirements/
 
I am RIA also selling annuities and life insurance. Lets assume I hire you and you pay for the additional E&O cost. Your FE sales before were made under suitability standard, which in your sales cycle means client wants to get burial insurance, is in reasonable health, has a checking account, done. Under a more expanded fiduciary standard, you have to do full fact finds. And if you do that, you just won't be able to make your numbers in the FE market.

Now for the occasional annuity sale, as long it is not qualified, you will find some carriers willing to take you even after the DOL ruling. Qualified money, I would not touch it unless you are willing to work under a broker/dealer or RIA.

I am not hiring anyone, but if I were hiring you, I would have to review all your fact finds and product sales including annuity and any insurance. You would have to compensate me either in the time I spend or in shared commissions.

You need about 10 million under management to make about 100K gross. I think it is better to build your insurance book business first and then build a good relationship with these people who have money. Once you think you can put together 20 to 30 clients that have about 5 million, it would be much easier to start your RIA and not pay any middle men anything.
 
You see this is something I find confusing.. If I were to touch retirement accounts not only would I need to have a best interest contract related to that qualified money.. Such as "Variable annuity" or w/e. But also for Life insurance that has absolutely nothing to do with said qualified money? That's absolutely ridiculous. What the hell does a final expense or term policy have to do with someones retirement account?

----------

Ok.. Just to be clear here.

From my understanding most insurers are taking steps to allow Annuities to remain compliant to the DOL outside of BICE. Such as moving to a more fee based model even among fixed annuities.

So the real question that I have to clarify then. Is if the insurers get this worked out and avoid BICE, do I still need to disclose my other "conflict of interest" under BICE that have nothing to do with qualified money. Regardless of weather I get securities licensed this is an issue we wall all deal with.
 
The BICE is for those annuities that don't fall under the Prohibited Transaction Exemption rule 8424 (fixed annuities). The BICE requires certain disclosures at the time of sale, and the commitment that the recommendation was made with a fiduciary standard of care.


The reason insurers are getting this all "worked out" is because insurers don't want to be the financial institution that is also sharing fiduciary liability in a compliance context they cannot monitor.

The reason that insurers are considering level commission compensation is to address the "reasonable compensation" requirement (whatever that means). Fred Reish has been making some interesting observations, and he addressed this one here: https://www.linkedin.com/pulse/inte...-fred-reish?trk=hp-feed-article-title-publish


There is a LOT of guesswork going on in regards to the DOL ruling, and unless it is struck down by a new incoming administration, it is simply going to be unworkable for the independent life & annuity agent. Such agents desiring to work with retirement accounts will HAVE to have some kind of securities licensing - either B/D or RIA (or both) - in order to have a firm's compliance oversight (and share fiduciary liability) on ALL retirement plan recommendations. And all such commissions from annuity sales will have to go through "their grid" in order to help compensate for the additional compliance and liability.

Of course, don't forget that you're not allowed to have a securities license JUST to sell annuities. We've already seen what one stupid agent did regarding that one.

http://www.insurance-forums.net/for...alling-yourself-financial-planner-t27412.html
 
Back
Top