Why is the insurance company putting a limit on my annuity purchase.

Jul 18, 2018

  1. Life Hawk
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    Life Hawk Guru

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    It's a often vague rules until someone complains ... then enter the lawyers... and the agent gets hung out to dry...
     
  2. VolAgent
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    VolAgent Guru

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    Yep, if I was doing annuities, I would want to make sure every last thing was disclosed to compliance. Because it is going to be a race to see who can throw who under the bus first when it goes south.
     
  3. ATM
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    ATM Super Genius

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    Is this $600,000 qualified or non-qualified?

    If it's qualified then there is a very good chance the agent will be deemed to be a fiduciary giving advice. The laws government fiduciaries is a whole different ball game than insurance laws.

    If you screw up as a fiduciary there may be criminal charges and penalties including doing time in a &@#$ you in the @$$ prison.
     
    ATM, Aug 14, 2018
    #13
  4. DHK
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    DHK "YOU CAN'T HANDLE THE TRUTH!"

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    DOL fiduciary ruling was struck down. No fiduciary issues, just suitability as defined by the company.
     
    DHK, Aug 14, 2018
    #14
  5. IsaacA
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    IsaacA Expert

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    Like others mentioned Insurance Companies do not want more than 50% (Typically in my experience it's always been 50%) of a client's assets in annuities.
    You'll be hard pressed finding a company that would accept the contract.
    However, there are exceptions I've had go through.
    Everything must be explained in writing with the agent and client signature.
     
    IsaacA, Aug 27, 2018
    #15
  6. Life Hawk
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    Life Hawk Guru

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    Add would add to that... "and the court" if you are so unlucky as to get that far.
     
  7. ATM
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    ATM Super Genius

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    Qualified retirement plans are governed by ERISA. The DOL Fiduciary rule, expanding fiduciary rules to non-ERISA plans was shot down, not the fiduciary rules embedded in ERISA.

    If it is a retirement plan you'd better act like a fiduciary.
     
    ATM, Sep 11, 2018
    #17
  8. DHK
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    DHK "YOU CAN'T HANDLE THE TRUTH!"

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    If you're managing a qualified retirement plan - absolutely.

    If you're advising a plan participant who has left their employer about their options for their balance, you just need to fully disclose their options, costs, and opportunities... and let them decide. It may not be 'fiduciary', but it's certainly a professional standard.
     
    DHK, Sep 11, 2018
    #18
  9. Allen Trent
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    Allen Trent Guru

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    If FINRA registered, I believe only the Rule 2111 "suitable" standard applies along with "reasonable due diligence" to collect all clients options & risk tolerance, etc. For non FINRA registered or non RIA or financial planners, the debate becomes "does a Life only agent selling only Fixed Annuities/Index Annuities" have the authority to advise a 401k plan participant holding equities to roll to an IRA"? Because they don't have licenses to advise in regard to the equities held in the current 401k, can they even evaluate what is currently in the plan if only Life licensed. I guess that will only be settled in a court if sued by a customer.
     
  10. DHK
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    DHK "YOU CAN'T HANDLE THE TRUTH!"

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    ABSOLUTELY. Just because I cannot provide an analysis, or give buying, selling, or holding recommendations... I can always present an alternative to what they already have.

    What factors should I consider?
    - Risk (in a general sense without specific analysis; you cannot say "you're taking too much risk in your allocation." You can say "the markets move unpredictably, but I can show you an alternative.")
    - Returns (again a general sense like above.)
    - Costs (easy to discuss with DOL 401(k) fees booklet)
    https://www.dol.gov/sites/default/f...ter/publications/a-look-at-401k-plan-fees.pdf
    - Terms (easy to discuss how 401(k) plans work)
    - Agent/Advisor Compensation: (easy to discuss how you pay fees directly out of your returns and the advisor continues to receive said compensation for the life of the account; FIAs are paid BASED on the product, but paid by insurance companies out of their general account. Even trail commissions don't come from the product itself.)

    If you're only comparing the underlying securities to whatever you may offer for a different investment portfolio... that's not enough of a reason to switch anyway - especially if the plan participant is 55, but not yet 59.5. You have to show that the switch (regardless of RIA or FIA) makes sense and is appropriate based on the client's current view of their needs today and for the future.
     
    DHK, Sep 11, 2018
    #20
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