Insurance-only Agents Being Courted by IMOs?

[Brian Anderson]

During a recent Brokers International webinar, BI President & CEO Mark Williams noted that a “feeding frenzy” could be upon us as IMOs look to sign up as many insurance-only agents as they can, since these agents must pick a single IMP to align with who can then sign their Best Interest Contract Exemption, allowing them to sell indexed annuities purchased with qualified money. IF, of course, the DOL Fiduciary Rule does in fact take effect on April 10. (more in article at first link below)

Insurance-only agents out there – are you feeling the love? Or playing the waiting game, thinking the DOL rule might get tabled? (see second link)

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[DecisionMan]

I've been insurance-only since 1990 when I gave up my registrations.

There hasn't been any more courting by IMOs other than the usual mass emails for webinars, offers of "free marketing" (which are never free), and more than enough marketers with free printing, lead programs, and trips as inducement to move contracts.

Last fall some FMO/IMO/MGA/etc groups used such BICE fear to imply I should move contracts to them since they already had an in-house BD or were going to align with one but since then most of my IMOs say there isn't a real issue of having to group all contracts within one IMO.

The "frenzy" that Brokers International might be referring to could simply be a marketing message to attempt to draw more insurance-only agents to them.

 

[DHK]

https://www.insurancenewsnet.com/innarticle/omb-targeting-jan-20-date-for-fi-exemption-rule

Regulators appear to be setting guidelines around IMO sales volumes, business history and precedent, reserving minimums and to a lesser extent, adequate errors and omissions protection coverage. But the regulators could settle on a mix of all three, or favor some criteria over others.

 

[Brian Anderson]

The 22 IMOs/FMOs (listed below) that have applied to become “financial institutions” and were waiting for guidance from the DOL just received 220 pages of it.

Among what's needed to “qualify” they need to generate more than $1.5 billion in annual fixed annuity contract sales, according to the draft proposal posted Wednesday on the Federal Register (link below).

A few snippets from the Executive Summary of the draft proposal:

• The exemption proposed in this document, if granted, would allow certain insurance intermediaries, and the insurance agents and insurance companies they contract with, to receive compensation in connection with fixed annuity transactions that may otherwise give rise to prohibited transactions as a result of the provision of investment advice to plan participants and beneficiaries, IRA owners and certain plan fiduciaries (including small plan sponsors).

• The class exemption proposed in this document would provide relief that is similar to the Best Interest Contract Exemption for certain insurance intermediaries that commit to act as Financial Institutions. Insurance intermediaries typically recruit, train and support independent insurance agents and market and distribute insurance products such as traditional fixed rate annuities and fixed indexed annuities. The intermediaries include organizations commonly referred to as independent marketing organizations (IMOs), field marketing organizations (FMOs) and brokerage general agencies (BGAs). The exemption would apply to recommendations of “Fixed Annuity Contracts,” which are generally defined as fixed rate annuities and fixed indexed annuities. If the conditions of the exemption are satisfied, insurance intermediaries that satisfy the definition of “Financial Institution,” as well as the insurance agents and insurance companies that they contract with, would be permitted to receive compensation and other consideration as a result of the provision of investment advice to Retirement Investors in connection with transactions involving these annuities.

• Pursuant to section VIII(e)(5) of the Best Interest Contract Exemption, the Department received 22 applications for individual exemptions from insurance intermediaries that contract with independent insurance agents to sell fixed annuities (applicants). The following entities submitted applications for individual exemptions permitting them to act as Financial Institutions under the Best Interest Contract Exemption:
Gradient Insurance Brokerage, Inc.
C2P Advisory Group, LLC dba Clarity to Prosperity
Legacy Marketing Group, LLC
InForce Solutions, LLC
Futurity First Insurance Agency
Financial Independence Group
Brokers International Ltd
Insurance Advocates
Advisors Excel
AmeriLife Group, LLC
InsurMark
Annexus
Ideal Producers Group
ECA Marketing
Saybrus Partners, Inc.
Alpine Brokerage Services
The Annuity Source, Inc.
M&O Financial, Inc.
Kestler Financial Group, Inc.
First Income Advisors
Crump Life Insurance Services, Inc.
The IMPACT Partnership, LLC

If you’ve got some time to kill, here is the link to the draft proposal:

https://www.federalregister.gov/documents/2017/01/19/2017-01316/proposed-best-interest-contract-exemption-for-insurance-intermediaries