Health,Life, + 6&63 Licensed, Now What?

Dec 20, 2008

  1. HealthGuy
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    Can someone tell me of a variable licensed brokerage I can work with to sell mutual funds and variable annuities...My main issue is that I have been 6 and 63 licensed along with my health and life license - but my bread and butter has been health and life insurance sales...However, I don't want to let my 6 and 63 lapse - but my dilemma is that I have no assets under management and would like to find a variable products brokerage that I can work with with lower entrance expectations...Can anyone tell me a variable mutual funds brokerage I can partner with that will allow me to enter without a book of variable business and spending thousands of dollars per year in additional E and O as well as low production requirements..I would like to ramp up and learn the variable business but can't neglect what has fed me thusfar: the health and life sales. Any ideas of broker dealers like this that can help me on the variable side?
     
  2. djs
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    djs Super Moderator Moderator

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    I'm not sure where you are at, so I can only give you a vague answer.

    Contact NPC at 406 Not Acceptable. They probably will not accept you directly due to low AUM, but they will refer you to one of their OSJ's that will let you hang your shingle there. Everyone I know that has done this has completely owned their book of business and could leave and take it elsewhere if they wanted.

    If you are in California, I can recommend some specifics to you.

    Dan
     
    djs, Dec 20, 2008
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  3. HealthGuy
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    Dan, thanks. What is an OSJ? And why would a little to no producer like me be accepted by one of NPCs affiliates? I guess I don't understand how they are different than any other broker dealer who says you have to have like 1 Billion in assets under management before you are let in the door?
     
    Last edited: Dec 20, 2008
  4. GreenSky
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    GreenSky Guru

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    I made a tough decision 5 years ago to ditch my 7/63. Wasn't worth the compliance crap and the annual BD inspection.

    In the past 5 years, I have not regretted it for a moment.

    Rick
     
    GreenSky, Dec 20, 2008
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  5. Joe Moore
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    Rick
    I did the same thing about 15 years ago. Actually it was my "broker-dealer" that let it lapse and did not notify me. At the time he was not my favorite person, but I have never missed it.
     
  6. djs
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    djs Super Moderator Moderator

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    The OSJ is the person who will monitor your compliance, approve you taking a dump, and come to your office at least once a year to do an inspection.

    NPC has a lot of startup individuals through their primary agents. It's about the same as why a P&C agent will hire a producer who was just licensed, it provides more volume, which leads to more $$$$.

    Till you've 'been there, done that', its really hard to explain. A lot of people won't take you without some history, you just need to find one that will, without requiring exclusivity (such as going to Ameriprise).

    While I don't work with NPC, I have some friends who do, they take new agents in if they fit. They take on a lot of responsibility, so it's not a slam dunk, bring in everyone.

    Dan
     
    djs, Dec 20, 2008
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  7. HealthGuy
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    Rick and Joe: Great posts...I have heard of other health and life guys letting the variable portion of their business go...Why in this era of health insurance perhaps going by the wayside with 'Obamacare' would letting a 6/63 or a 7/63 go be something to not regret? I understand the hassles, but isn't it always good to have another way to make money in this business...Some guys who do the variable investing say that selling health insurance and non variable life isn't the way to really make good money...They almost scoff at health producers who sell non variable life when they can. They say the real money is in selling mutual funds, etc...Comments please - and just don't say who is making money selling mutual funds in this bad economy - the market will come back...
     
  8. Joe Moore
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    I personally never had the grasp of the "pie-in-the-sky" unreal potential stock market gains. There are too many "pump and dump" hyped stories about stocks and funds out there. Very few of them are true.

    It is hard as hell, if not impossible, to explain to a client why their "can't miss" investment is down 50%, or 100%. There are simply too many hazards to make a living in this market and keep your integrity with the public. The business is predicated on everything always rising, which is far from the truth.

    I got my 6 and 63 to offer stock in a burial insurance company being formed in TN. They raised around $4 million. In about 2 years that $4 mil was gone due to pitiful products, bad and greedy management, and high rolling. They were in the process of being declared insolvent by the State Insurance Department, when they got a call from a "Blind Trust" looking to buy insurance companies. Yes, it so happens this company is for sale. The blind trust turned out to be Marty Frankel's operation.
    Martin Frankel was responsible for one of America's biggest insurance fraud schemes the Crime Library - Crime Library on truTV.com

    Remember Marty? He is the one that took down a lot of companies. Here is an quote from the above article:

    At some point in 1991, Marty linked up with John Hackney, a Tennessee businessman with some banking experience. He fancied himself a deal maker and wanted to put together a group of investors to buy the financially troubled Franklin American Life Insurance Co. of Franklin, Tennessee.

    This company (as a lot of them did) fell hook, line and sinker for his plan. At the time they had no choice to deal or be taken over by the State. The stockholders suffered the consequences. I decided then, that if I was not in the know of what was happening to a company, I should not be offering it to the public.

    I have never questioned my decision. There have been some trying times in the insurance business, but at least you have a clue what you are offering to the public.

    I had a friend who was involved with the formation of this company, and ended up making money because he got his "founders stock" at about 10% of what the public paid; but a lot of the stockholders being sold the "IPO" lost their butt. This same friend got snookered by a Colorado Internet IPO and got a lot of his friends to invest (rumored to be about $13 million from our small town). He fell for this, and got plenty of widows in his church to invest their life savings in this gamble. He makes a trip to Colorado and the office had been closed, with nothing left but 2 empty rooms. At about age 75, he reputation was tarnished. If he had been 35, he would have probably gone to jail.

    These are a couple of reasons I am not interested in playing a game where I don't fully understand all the rules or motivations and schemes behind the scenes.
    - - - - - - - - - - - - - - - - - -
    Here are more quotes from the above linked article:

    Congress's General Accounting Office (GAO) in September of 2000 laid the blame squarely on state insurance regulators. In a letter to the National Association of Insurance Commissioners, Congressman John Dingell of the House Commerce Committee wrote:
    This travesty occurred because state insurance regulators were either too blind to see, or too unwilling to acknowledge, the scam Mr. Frankel perpetrated... This fraud went on far too long, not because Mr. Frankel was clever and deceptive, but because he was operating in an environment where the regulators lacked the skill, authority, access to basic information, resources and 'healthy skepticism.'
    The Tennessee Comptroller's Office agreed in its audit report, issued in July of 2000, which details the "gross breakdown" in the state's regulation of Franklin American Life Insurance Co."
    The audit report mentions the unusually structured arrangement that placed control of the insurance company in the hands of a sole trustee, Mr. Frankel. When suspicious transactions appeared, state regulators "instead of demanding explanations...decided that even though the circumstances appeared unusual, unless there was a law, regulation or policy that was clearly violated, they would take no action." Arthur A. Hayes Jr., director of audits for the comptroller, said state examiners were snowed by the audacity of the scheme.
    Insurance commissioners in four states filed a federal suit seeking $600 million in damages for the money Frankel stole from companies in Arkansas, Mississippi, Missouri, Oklahoma and Tennessee.
     
    Last edited: Dec 21, 2008
  9. GreenSky
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    I gave up my Series 7 for many reasons. I believe if you don't specialize in investments you have no business advising clients where to put their money. Since I did not primarily work securities, I did not, nor do I, feel confident in making recommendations.

    Those of us selling insurance deal with certainty. If you buy life insurance and die, your beneficiaries will be paid. If you buy health insurance and you have a covered claim, it will be paid. Your out of pocket is limited by the policy.

    A fixed annuity is the same thing. Guarantees. That's what we sell when we sell insurance.

    I don't know how much money is being left on the table by not selling a variable policy. But I really like never having to say "I'm sorry" when a mutual fund, variable annuity, etc. goes south. I'll leave that kind of thing to those who profess to have some special knowledge, crystal ball, or whatever to work that market.

    I also don't sell real estate, electronics, cable tv, or items other than insurance. I'm an expert (compared to 99% of agents) in my field and happy earning 6 figures working very limited hours doing it.

    Rick
     
    GreenSky, Dec 21, 2008
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  10. HealthGuy
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    Great posts guys, seems as though many who sell mutual funds and the like think that us health guys are 'transactional' and have no real long term relationships with our clients...As if a 401K rollover isn't a transation????
     
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