Broker Dealer Suggestions

[scagnt83]

As long as he understands when you say 'gradually', sure, that's an option and technically would be diversifying.

Did you build a practice from start via RIA route (even if including insurance?)

Thought not.

So you are able to answer your own question that you asked me?? You don't know me and you don't know what you are talking about.

I have an insurance practice already. And am in the beginning stages of building a book of AUM as an IAR. So I have been in the exact same position that the OP is in now.

If the OP goes under a BD his insurance business will be limited to approved vendors with most BDs. Many BDs will also make him run his insurance biz through his grid and take a haircut off it.

As a RIA he can keep his insurance practice separate from his securities practice. So he would have complete independence with both.

If he wants to keep his independence with his insurance business then the 65 is by far the best way to go. There are RIAs out there that he could work under who will let him start with no AUM. Or he could just start his own.

 

[just some f.e.llow]

So you are able to answer your own question that you asked me?? You don't know me and you don't know what you are talking about.

I have an insurance practice already. And am in the beginning stages of building a book of AUM as an IAR. So I have been in the exact same position that the OP is in now.

If the OP goes under a BD his insurance business will be limited to approved vendors with most BDs. Many BDs will also make him run his insurance biz through his grid and take a haircut off it.

As a RIA he can keep his insurance practice separate from his securities practice. So he would have complete independence with both.

If he wants to keep his independence with his insurance business then the 65 is by far the best way to go. There are RIAs out there that he could work under who will let him start with no AUM. Or he could just start his own.

Thanks for all the feedback, guys.

SCAgent, you're suggesting doing a 65 and affiliating with a registered investment advisor, and offering my services on a fee only basis, correct?

 

[DHK]

If you're looking to offer variable annuities... last I've heard the fee-based variable annuities aren't that great. To sell the good ones, you'd need a B/D and a Series 6 or 7.

If you're looking to do mutual funds as an IAR/RIA (Series 65), make sure you know what your 3rd party asset manager's minimum account size is. Some may be as high as $100,000. Others may be lower. Commission-based mutual funds can be sold with as little as $1,000.

This is just the 'mechanics' of the licensing. Don't forget there are supervisory duties of a B/D and a fiduciary duty as an IAR/RIA. Lots of discussion here on fiduciary duties and standards. You may want to review them.

 

[scagnt83]

SCAgent, you're suggesting doing a 65 and affiliating with a registered investment advisor, and offering my services on a fee only basis, correct?

Correct. Either affiliating with a RIA as an IAR or starting your own RIA.

And Fee Based does not necessarily mean the client cutting a check to you. You can do that. But you can also just take a Wrap Fee (% of assets) on the funds and it comes out directly from the funds just like the commissions a series 6 or 7 Broker takes.

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If you're looking to offer variable annuities... last I've heard the fee-based variable annuities aren't that great. To sell the good ones, you'd need a B/D and a Series 6 or 7.

I would not really agree with that. Jefferson National has really strong VAs from what I have seen and exclusively works with RIAs. Jackson National has a RIA VA too (or at last they used to). I think Pru might have one too.

Although I cant think of a really good reason to sell VAs if you are a 65 and have a Custodian. Unless you want fee free trading... but I think many VAs limit the re-allocations. And GMWBs are much stronger on IAs.

 

[DHK]

Most VAs also limit your portfolio allocation to portfolio models if you have a living benefit rider.

 

[just some f.e.llow]

If you're looking to offer variable annuities... last I've heard the fee-based variable annuities aren't that great. To sell the good ones, you'd need a B/D and a Series 6 or 7.

If you're looking to do mutual funds as an IAR/RIA (Series 65), make sure you know what your 3rd party asset manager's minimum account size is. Some may be as high as $100,000. Others may be lower. Commission-based mutual funds can be sold with as little as $1,000.

This is just the 'mechanics' of the licensing. Don't forget there are supervisory duties of a B/D and a fiduciary duty as an IAR/RIA. Lots of discussion here on fiduciary duties and standards. You may want to review them.

Good stuff. Thanks so much, dhk.

How about this: I'm going to focus on 403b. For any who don't know, that's not for profit retirement plans. Think police, clergy, firemen...

Their options are usually garbage. You see some fia and fa, but invariably (pardon the pun) there are va options from Axa, maybe metlife.

If I wanted to be able to offer all of these options, would I be correct that I need a 6 or 7?

Would you contract with all of these companies in this market?

Again, any feedback welcome. And a huge thank you in advance.

 

[scagnt83]

If you're looking to do mutual funds as an IAR/RIA (Series 65), make sure you know what your 3rd party asset manager's minimum account size is. Some may be as high as $100,000. Others may be lower. Commission-based mutual funds can be sold with as little as $1,000.

You dont have to use TPAMs or TAMPs if you want a client in MFs. You can just place them in institutional shares via your Custodian. You still will have account minimums but they are often lower than the ones you mentioned.
Although I know one RIA who exclusively uses TAMPs (who have custody of the assets) and they are not affiliated with a Custodian at all. Of course that model does not work for everyone.

The bigger issue is how involved does the OP want to be in the portfolio management process. And what type of client do they want to work with. For the liability and work you take on as a Fiduciary I would set a $50k min at the very least.... in reality I would have it at $100k unless it was an existing client or they had significant other assets I could get in the future. So if he wants to chase $5k accounts or strictly sell VAs then go the BD route.

 

[just some f.e.llow]

Correct. Either affiliating with a RIA as an IAR or starting your own RIA.

And Fee Based does not necessarily mean the client cutting a check to you. You can do that. But you can also just take a Wrap Fee (% of assets) on the funds and it comes out directly from the funds just like the commissions a series 6 or 7 Broker takes.

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I would really agree with that. Jefferson National has really strong VAs from what I have seen and exclusively works with RIAs. Jackson National has a RIA VA too (or at last they used to). I think Pru might have one too.

Although I cant think of a really good reason to sell VAs if you are a 65 and have a Custodian. Unless you want fee free trading... but I think many VAs limit the re-allocations. And GMWBs are much stronger on IAs.

I'm partial to fia personally, but when all you have is a hammer everything can look like a nail. That's why I'm getting more education.

Wrap fee makes a lot of sense to me and also ties my success to the success of the client, which is good imho.

 

[scagnt83]

How about this: I'm going to focus on 403b. For any who don't know, that's not for profit retirement plans. Think police, clergy, firemen...

Their options are usually garbage. You see some fia and fa, but invariably (pardon the pun) there are va options from Axa, maybe metlife.

If I wanted to be able to offer all of these options, would I be correct that I need a 6 or 7?

Would you contract with all of these companies in this market?

Again, any feedback welcome. And a huge thank you in advance.

Yes you would need a 6 or 7 if you want to sell individual VAs to this market.

However, you are often able to fund a 403b with Group VAs. And most Group VAs will work with RIAs. The catch is that if a plan already has TSAs in it (individual tax sheltered annuities) then you cant transfer all of the assets over since some will still be under Surrender.

So yes, if you want to work the 403b market you probably should get your 6 or 7. Norwayguy used to work the 403b market heavily in the past. I would reach out to him for further insight. I can tell you all about 401Ks & Pensions, but my 403b knowledge is limited in comparison.

 

[DHK]

Good stuff. Thanks so much, dhk.

How about this: I'm going to focus on 403b. For any who don't know, that's not for profit retirement plans. Think police, clergy, firemen...

Their options are usually garbage. You see some fia and fa, but invariably (pardon the pun) there are va options from Axa, maybe metlife.

If I wanted to be able to offer all of these options, would I be correct that I need a 6 or 7?

Would you contract with all of these companies in this market?

Again, any feedback welcome. And a huge thank you in advance.

Yes, you would need a series 6 or 7.

Based on the demographics you are targeting, you may want to consider VALIC. Last I remember, you would also get a book of business to work if you worked for them. https://www.valic.com/home_3240_422903.html

Just remember: when you work for or affiliate with a broker/dealer, you either give up being an independent insurance agent, or you must get approval for it as an outside business activity (OBA). If they have an "in house" insurance company, you'll probably be limited to their offerings and contracts.