Selling an FIA with Just a Life License

[FireDragon]

Can someone sell a fixed indexed annuity funded by a transfer from a person's 401k with only a life insurance license in PA? I've asked carriers and looked online and everyone seems to say that this is not a problem, but I thought you needed more than just a life insurance license.

 

[VolAgent]

To the best of my knowledge, only Arkansas has a source of funds rule that requires security licensing to move money away from a securities product.

When in doubt, call the DOI. Ask if there is any additional licensing needed since the funds will be coming from a securities product.

 

[DHK]

Can someone sell a fixed indexed annuity funded by a transfer from a person's 401k with only a life insurance license in PA? I've asked carriers and looked online and everyone seems to say that this is not a problem, but I thought you needed more than just a life insurance license.

There are two parts to your question.

1) Can you recommend someone to transfer their 401(k) balance to a fixed indexed annuity without a securities license?

No. You cannot. Without proper securities licensing and registration, you cannot make any buying, holding, selling, or any analysis of securities.

You can only present the FIA as an alternative to their securities portfolio.

This is just one way that some RIA firms are trying to cater to insurance-only agents. You can read my comments with Roccy DeFrancesco with his assertion that one can protect themselves by having a Series 65 and registering with an RIA.

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It is worth noting that many major producers do have a Series 6/63 and/or 65.

2) Can you sell a FIA funded with qualified funds from a 401(k)?

Yes. As long as the person has separated from service &/or is eligible for an in-service distribution, you can do that.

Just make sure you're not giving a recommendation or an analysis of their portfolio without proper licensing and registration.

 

[FireDragon]

Thank you both for clearing that up. I've had my series 7 & 66 almost as long as my life license so it never occurred to me that someone could do this. So when I review a new prospect's portfolio and dug a little deeper I found out that the agent who sold her this particular annuity was a life only guy. Anyhow, thanks for taking the time to answer my question