Source of Funds

[BNTRS]

This makes logical sense, one shouldn't realistically be able to recommend that an investment a client holds is inferior to an annuity product without having full knowledge of that investment product.

The problem, as we know, is that merely having a license does not prove proeficiency in either investment products or insurance products. It'sa powergrab without a lot of concern for a real solution.

 

[scagnt83]

This makes logical sense, one shouldn't realistically be able to recommend that an investment a client holds is inferior to an annuity product without having full knowledge of that investment product.

The problem, as we know, is that merely having a license does not prove proeficiency in either investment products or insurance products. It'sa powergrab without a lot of concern for a real solution.

Your right. If someone isnt licensed to know about the product they are recommending the client drop, then how would they know if their recommendation is suitable or not??

Of course a simple license isnt going to give you the knowledge base needed for this industry, but at least its a start, and proves that you are willing to make an effort to increase your knowledge..

 

[Norwayguy]

I guess what I meant to say was that I never had to transfer funds from securities to fixed annuities. I recommend a product and pick up a check if they want it.

Sure that works for you but what if the client is in a retirement account then you either must transfer custodian to custodian or they can do an indirect rollover but in this case the client only gets 80% of the money must make up the additional 20% from own funds and await a refund to get back the withheld amount...
- - - - - - - - - - - - - - - - - -

Your right. If someone isnt licensed to know about the product they are recommending the client drop, then how would they know if their recommendation is suitable or not??

Of course a simple license isnt going to give you the knowledge base needed for this industry, but at least its a start, and proves that you are willing to make an effort to increase your knowledge..

First I am not affected by this ruling if it goes through in that I am also a registered rep. However it isn't always a case of being inferior it can be a case of the client choosing based on assumed risk of the market versus a fixed annuity.

While we are on this subject what about a customer service person at a bank rolling over retirement account into a CD. I know banks are excluded from many rules including compensation when it comes to securities sales but my point being I have seen many instances where these individuals hold no license and roll money from 401Ks which where invested in mutual funds into a bank CD notice the SEC has no problem with that.

Also why do you assume a person holding an insurance license can not make recommendations concerning securities I would wager to bet there are many formerly registered reps who dropped registration not because they did not know the products or made unsuitable recommendations but instead where tired of the crazy compliance burden.

 

[0b1kanobee]

If this goes through then a suspect a spike in VA annuities

Also, these securities brokers don't always know much about annuities. They have one of my clients in high risk mutual funds and it is all the money they have, so that tells you a little about how much some of them know.

They expect their clients to live of 4% withdrawals per year. Makes no sense. It is a power grab no matter how you look at it.

 

[scagnt83]

First I am not affected by this ruling if it goes through in that I am also a registered rep. However it isn't always a case of being inferior it can be a case of the client choosing based on assumed risk of the market versus a fixed annuity.


"Client preferences and requests will always affect the positioning of assets."

While we are on this subject what about a customer service person at a bank rolling over retirement account into a CD. I know banks are excluded from many rules including compensation when it comes to securities sales but my point being I have seen many instances where these individuals hold no license and roll money from 401Ks which where invested in mutual funds into a bank CD notice the SEC has no problem with that.

Also why do you assume a person holding an insurance license can not make recommendations concerning securities I would wager to bet there are many formerly registered reps who dropped registration not because they did not know the products or made unsuitable recommendations but instead where tired of the crazy compliance burden.

No one is assuming that an insurance agent is not capable of making suitable reccomendations. There are many that are.
But, many are not.
This is the problem. An agent who is two days into the biz and has no investment training or experience at all, is able to recommend to a client that they move investment funds to a fixed annuity.
There is no way to differentiate between the knowledgeable agent and the uneducated agent.

After being in this business for a while, im to the point where I feel an agent should be required to do an apprenticeship of at least 6 months with an experienced agent before being able to sell on their own.
For annuities and other investment related products, even longer.
Plus the CE requirements should be beefed up and regulated more.
- - - - - - - - - - - - - - - - - -

Also, these securities brokers don't always know much about annuities. They have one of my clients in high risk mutual funds and it is all the money they have, so that tells you a little about how much some of them know.

Thats true. Just because someone is registered does not mean that they are well versed in risk management. I find this all the time.

Most brokers in the big name firms are pushed to get the biggest returns possible. Plus, at places like that, status around the office is based on who has the biggest returns for the month. Not the kind of guys I want managing my retirement savings!!
- - - - - - - - - - - - - - - - - -

They expect their clients to live of 4% withdrawals per year.

You lost me here..
Whats wrong with 4% withdrawals? Withdrawals should be based on the clients need and asset size..

 

[Norwayguy]

No one is assuming that an insurance agent is not capable of making suitable reccomendations. There are many that are.
But, many are not.
This is the problem. An agent who is two days into the biz and has no investment training or experience at all, is able to recommend to a client that they move investment funds to a fixed annuity.
There is no way to differentiate between the knowledgeable agent and the uneducated agent.

After being in this business for a while, im to the point where I feel an agent should be required to do an apprenticeship of at least 6 months with an experienced agent before being able to sell on their own.
For annuities and other investment related products, even longer.
Plus the CE requirements should be beefed up and regulated more.

Oh I agree with you that the basic licensing really only gives you the basics...the problem is the same is true on the Registered Rep side...I run into people that met with a rep once and he put them into what ever fund had the highest historical average irregardless of the risk and if you take the time to research them you can find they where new to the business...

But all this does is protect the brokerage houses and not really the public...When I meet with a prospect I do not bring products with me on the first appointment, many ask why and I tell them that I don't know what to bring, mutual funds, VA, Indexed or Fixed annuities heck a single premium life might be the most appropriate based on the clients objective, risk tolerance and time frame and to that the amount because certain products have minimums.

I guess I am angry about this in that I have thought of dropping my securities registration because of the hassles of compliance.

 

[scagnt83]

I guess I am angry about this in that I have thought of dropping my securities registration because of the hassles of compliance.

I totally understand.
There are more and more compliance related regulations, but they are all just superficial.
There is almost no meaningful regulation in the industry when it comes to suitability.
- - - - - - - - - - - - - - - - - -

But all this does is protect the brokerage houses and not really the public....

Pretty much!!
Basically they have better lobbyist than we do! .... I wonder why that is??.... maybe because NAIFA and other lobbyist organizations have very little participation from agents!!!
Most LI agents love to complain but hate to contribute.

 

[0b1kanobee]

- - - - - - - - - - - - - - - - - -


You lost me here..
Whats wrong with 4% withdrawals? Withdrawals should be based on the clients need and asset size..[/QUOTE]


Jack Marrion just did an article about this and he speaks about the 4%. When I get a chance I'll post it.

 

[Crabcake Johnny]

Insurance agents without financial training are not qualified to properly advise their clients regarding stocks, bonds, CD's, etc...Period.

For every one educated agent who does their clients a great service by recommending annuities there's likely 10 who received piss poor training through their FMO. These untrained agents see everything in black and white: Annuities = save. Investments = unsafe.

You typically know someone has poor training when they rattle off statements like "all upside and no downside" and "you can't lose money with an annuity."

There are ethical challenges with selling annuities that don't exist with other lines. We all make higher commissions based on the premiums but there's a "cap" regarding most life and health products based on the client's budget.

The issue with annuity commissions is the more money you get them to transfer, the more the agent makes. This becomes challenging if some old lady says "ok, I have 500K in stocks and CDs, how much do you recommend I put into the annuity?"

 

[Norwayguy]

There are ethical challenges with selling annuities that don't exist with other lines. We all make higher commissions based on the premiums but there's a "cap" regarding most life and health products based on the client's budget.

The issue with annuity commissions is the more money you get them to transfer, the more the agent makes. This becomes challenging if some old lady says "ok, I have 500K in stocks and CDs, how much do you recommend I put into the annuity?"

Okay, you lost me here...yes the more you invest the more I make, wether it be an Annuity, Mutual Fund etc....The same would be said for the higher the health insurance premium the more you make...excluding flat comp...

You are right about the training issue..but if this is your only issue then what the SEC is doing does nothing about training...I know and have worked with many clueless registered reps as well and as I understand this possible rule a registered rep would be able to move and form of asset less a few classes while an insurance only person would be limited to life and annuity transactions.

I guess I'm teed because more than clueless Insurance agents and Registered Reps..I've seen unlicensed CSR at banks putting everything into CDs regardless of risk tolerance, time frame and objective.