- 2,908
I meant the fund company rather than the broker dealer but it could be the broker dealer too depending on where the funds are held.
Winter
How Do You Sell Annuities
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I meant the fund company rather than the broker dealer but it could be the broker dealer too depending on where the funds are held.
Winter
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It only makes sense doesn't it, yet Matt is correct, many in the Securities Field actually believe they have that kind of power. As some say, "Truth is stranger than Fiction".
Ps, and may we all hope that the Congress is never stupid enough (well that is yet to be seen) to give the CFP Organization their long sort after SRO.
- 2,908
I think that the problem comes up if you compare the actual performance of an annuity to mutual funds- not if you clarify in general terms that is not a variable product.
Winter
You are speaking of a slippery slope.
I agree with you, but the regulators at least here in KY do not agree with you. I know of a agent who was doing just what you are talking about, he never talked specifics. But he had several clients liquidate large securities accounts and move the money into fixed annuities. The Kentucky Department of Financial Institutions ruled that because the client originally had securities when he met them, and they rolled those accounts to fixed products he had to have given securities advice. The client was asked if they would have moved the money had they not met the agent and they said no. Only after meeting with him did they decide they did not want the securities account. He lost his insurance license and currently can not get approved for a securities license. He could fight this out in the courts, but with no income, how does he do that??
Matt
OUCH!!!!
That is why it is a lot easier to use an intermdiary to do the liquidation. You get all the documentation done by a 3rd party.
With respect to that agent, though, how did it all start? It just seems like far too harsh for his licensed to get yanked. And I wonder what the result would have been had he simply gotten his 65. What do you think?
That is why it is a lot easier to use an intermdiary to do the liquidation. You get all the documentation done by a 3rd party.
With respect to that agent, though, how did it all start? It just seems like far too harsh for his licensed to get yanked. And I wonder what the result would have been had he simply gotten his 65. What do you think?
- 2,908
As stated, this would certainly come as a surprise to all of the annuity companies who are also regulated. They have agents career and independant who make their living rolling 401k plans into annuities, for example.
In the case you cited, I would have to look at the facts. We can say that he did not make a specific securities recommendation and only talked in general terms but that may only be what the agent used as a defense which is different than what the regulators may have found.
As part of the proceedings, the client may have stated that he would not have moved his funds if he had not met the agent but that is not the only test that applies. We cannot conclude that insurance agents are therefore forbidden to talk or do business with anyone who owns securities. If I talk to a business owner about an annuity and later he decides that he has some mutual funds that he is fed up with and would like to put them into something else like the annuity that we discussed then you could argue that he never would have done that if he had not talked with me. I don't think that makes it a securities transaction any more than if the bank showed him a CD and told him how he can roll his 401k there or where he could put his funds if he is fed up with the stock market based on his own conclusions.
The other thing that has to be considered is that you are obligated to do a suitability analysis when you sell an annuity with most of the major carriers. That may not only allow you but *require you* to get some general understanding of where their other assets are currently invested and what they hope to accomplish that is not currently being accomplished.
We all know that agents get away with stuff everyday but I just really, really don't think that it has escaped the attention of the regulators that at least half of the business that annuity companies are doing is based on agents with just insurance licenses rolling mutual funds into annuities.
We can agree the rules are flaky and put you in a double bind and you have to watch your backside either way and the rules might be different next month.
Winter
Winter, I agree with you! But I also believe that the regulators are out of control in some cases. I know the agent (former agent) that I mentioned personally. I have seen his presentation that he was using with clients, and in my mind he was not giving investment advice. But what I think does not matter. Right or wrong the regulators are taking a position that if you liquidate a security and put that money into an annuity, you are giving investment advice.
I had a regulator tell me this to my face. I have been securities licensed for almost 10 years now so I do not have to worry about this particular debate. But a lot of annuity agents are not securites licensed and the regulators seem to want to stop them one agent at a time.
Matt
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I have no doubt what you are saying is 100% true, yet they will be challenged. Just a matter of which Carrier or Agent they really piss off with this insanity. I'm really thinking that various carriers should start a Legal Defense Fund for those Agents acting correctly (suitability and fudiciary) so when these securities bozoos come knocking they get their rearends taken to court.
Or simply, do proper documentation about the sale and exactly how the sale of the Annuity came about. Or one can go get their IA license, which the test isn't the license but even that seems to be under attack by FINRA and their desires to restrict the financial freedom of their clients. I really think in the end that FINRA and the SEC will have yet another black eye.
First and foremost, if you are not securities licensed, then it is your duty to specifically instruct your client/prospect that you are an insurance agent/producer, nothing more. You do not present yourself in any other way.
Personally, I do not have my securities and have sold fixed annuities w/o any trouble. However, should I run into any problems that may occur, I have associates/friends who are licensed that I will refer my prospect to, because I know where to draw the line and do not want to jeapordize my career in the least.
If I were to find a prospect who had funds in a variable product, I would not have a problem with bringing in one of my friends as a mediator of sorts. Do I lose on commissions? Yep, but I still play by the rules and keep my career in tact.
As getting the 65? Why not just get a 6, you are still within the law, unless you want to get into the meaty securities, which I have no interest in. Besides, my e&o premiums are just fine where they are, I do not need them to quadruple or whatever that cost may be.
Personally, I do not have my securities and have sold fixed annuities w/o any trouble. However, should I run into any problems that may occur, I have associates/friends who are licensed that I will refer my prospect to, because I know where to draw the line and do not want to jeapordize my career in the least.
If I were to find a prospect who had funds in a variable product, I would not have a problem with bringing in one of my friends as a mediator of sorts. Do I lose on commissions? Yep, but I still play by the rules and keep my career in tact.
As getting the 65? Why not just get a 6, you are still within the law, unless you want to get into the meaty securities, which I have no interest in. Besides, my e&o premiums are just fine where they are, I do not need them to quadruple or whatever that cost may be.
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Once again, if I went into a individual's house and sold a UL or WL, and they decide to take money out of their MF to pay the yearly premium, I promote the idea of paying annually. Does that mean, I would be subject to the same scutiny?
I don't expect this kind of talk stopping at annuities. Go over to the few financial discussion boards, you don't have to look far to find talk about the No Load and how that should replace all commission products, including Term. While not all planners may feel this way but a hard core group is out there, just like we see them against Ins. Agents (commission sales) selling annuities, they are also against commission selling basically on anything. So the main question is do you believe in traditional way of selling insurance products?
I don't expect this kind of talk stopping at annuities. Go over to the few financial discussion boards, you don't have to look far to find talk about the No Load and how that should replace all commission products, including Term. While not all planners may feel this way but a hard core group is out there, just like we see them against Ins. Agents (commission sales) selling annuities, they are also against commission selling basically on anything. So the main question is do you believe in traditional way of selling insurance products?
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