Registered Reps, B-D's, Dropping Your Securites License

Larry Tew

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Raleigh
For registered reps:

1. What licenses do you have?

2. Who is your broker-dealer?

3. Who has given up their securities licenses and why?
 
1. No longer have 7/66 licenses (due to expire in April)

2. No B/D. Was with a credit union B/D years ago.

3. I got into this business under the impression of HELPING people to improve their financial picture. Having been with a bank b/d, my first responsibility was to sell those things that paid me - and that was securities. Specifically, mutual funds, variable annuities with living benefits and fee-based asset management.

Most of these people didn't have a proper insurance foundation, nor did I truly understand how well insurance would have an impact on one's retirement income choices.

So, the problem became that I sold people securities who (looking back now) I wouldn't recommend to them in the first place. They should NOT have put money in mutual funds, but into fixed annuities and life insurance - for a sure financial foundation. This also led to having nervous investors that could trigger a complaint - with just an email sent to me. (Remember that compliance will review all emails that you RECEIVE as well as sent.)

With securities, you prove yourself over time to your client that you were worth investing with - and sometimes you are continuously re-selling your client to be calm during turbulent economic times. Why? To avoid a complaint.

What if that same investor wants "out" within 6 months - and you AGREE? Then if they paid any kind of CDSC or A-share load, then compliance will ask you all kinds of questions.

Compliance is not YOUR friend. They don't care about you. They care about protecting the firm from compliants.

With insurance, you have already proven yourself by selling the policy with safety, security and guarantees. You can focus on helping people and not worrying about their account values or the general economy.

In addition, there is a high cost and time involved with compliance. Everything must be submitted and approved in advance - including emails.

Compliance interferes with EVERYTHING in your life.
- Want to be a silent partner in someone else's business? Better inform your compliance dept.
- Want to serve on the board of directors in a company? Better inform your compliance department.
- Want to earn ANY money outside your employment with your B/D? Better inform your compliance department.
- Want to give a seminar? It had better be a "sanitized, pre-approved package".
- Want to send out a letter to your clients? Better get it approved.

If you don't, you can be FINED or even BANNED from the financial industry.

Then there's time. You already took time to sell the investor to invest in your recommendation. Then you need to keep them calm and do periodic reviews. How much are those trails paying you? Are you earning enough to justify your time, effort, energy & compliance for all this? I determined that it wasn't - at least for me.

The combination of time, oversight, nervous investors and low commissions helped me realize that being FINRA registered is just a bad business proposition that benefited the EMPLOYER and not me.
 
DHK, I understand. I got my 6 / 63 in 1983, my 26 in ~2002. Beyond using variable annuities for IRA and 401(k) rollovers, I'm in philosophical agreement with you. The compliance issue is almost enough for me to drop mine too. I just haven't figured out a way to replace the need for the VA as mentioned earlier. Some would say to get a strong company such as Jackson and use EI annuities instead of variable. I'm not quite there yet, but getting closer every day.
 
Oh if I had a dollar for every time this issue came to mind. I hate being securities licensed. I used to buy into the idea that having it would allow me to take over other accounts and get rid of the other advisor, that's worked...never. Unless the person was looking to fire their financial person I don't run into a lot of people who suddenly want to sign all their other accounts over to me just because I talked to them, even if I worked with them and ended up selling them something.

I'm a big believer that the insurance, investment, and banking industries have all gone into overdrive in their attempts to cross sell each other's products. Everyone is too busy trying to be a jack of all trades, and it's not working all that well.


Some would say to get a strong company such as Jackson and use EI annuities instead of variable. I'm not quite there yet, but getting closer every day.

I used to be extremely opposed to this idea, but now I'm drawing closer to it.
 
There are fee-based VAs out there for RIAs that also offer living benefits.

I am NOT an RIA right now, so I haven't looked for one. If you set up your own RIA (Series 65 required + state filing requirements), your trading platform may have some ideas for you to consider.

BTW, there are a LOT more prospects that need life, DI, LTC, Annuity savings vehicles than prospects who need and qualify for an investment advisor. Just the pool of prospects ALONE makes it worthwhile to drop the securities licensing.
 
I bitch about compliance, but at this stage in the game, I see the RR status as a necessary evil if I'm to eventually form my own RIA. To make it worth the time, I figure I would need at least 10 million in assets before it would be worth the trouble and expense to form an RIA. I know someone who dropped his securities licenses and formed an RIA, but guess what, he still has compliance issues to consider and audits from the state.
 
I gave up my 6/63 licenses. Wonder now why I put myself through the expense to get them. Personally before I got into this industry I know I would never have taken my investments away from my asset manager and given them to my insurance person, so I can't justify asking anyone else to do the same. But I'm still a newbie, what do I know?
 
Haven't dumped my FINRA registrations as of yet...But keep wondering why I'm putting up with all the cr*p that goes along with being a Registered Rep..

I know I am eventually going to dump FINRA but not just yet.
 
Peter,

You realize that by posting your real name and having securities licenses, that you are "advertising" by sending a message over state lines (to states you're not registered for securities) to more than one person at a time?

If you fail to have each and every post approved by your compliance in advance, then your B/D risks having a complaint for "lack of supervision" of your activities.

Something to think about.
 
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