College Funding market

[Allen Trent]

It's not a "fine line" at all. I do this ALL the time.

It's funny how life agents believe that all they are supposed to know... is life insurance. Nope. I know far more about finance to give advice over - as long as I'm not giving advice on their securities holdings, I'm fine.

I guess the fine line aspect I was thinking is the part in the article that stated she has to 1st educate them on the advantages & disadvantages of their current 401k & Roth IRA. Directing someone to re-direct their 401k monies or future contributions to something you sell appears to be a conflict of interest. But, you are likely correct that the current SEC regs & with DOL gone, it may not be a current violation. Some of the new SEC regs may make it more clear on what can or cant be said in particular on ERISA products.

If life insurance is the answer to help someone in several ways, I guess I have never been shy to be clear about it up front. Never felt the need to call it college planning or family protection & hope the person doesnt figure out I am a life insurance agent.

 

[DHK]

If you introduce yourself as a life insurance agent, you are then under hostage of what THEY think a life insurance agent (and life insurance policies) do.

Most people don't have a clue about what life insurance does... so I don't market myself in that way - other than saying that I'm in the Insurance and Financial Solutions business.

It's the same as announcing the price of your product "out of sequence". If you say your product is $5... before you establish value, then it's too expensive. But if you establish the value of the product and what it does... then you can talk about price or contribution amounts far easier and in a better context.

 

[old rookie]

This is great stuff. If I refer to myself as a college funding and planning consultant am I in compliance or stepping out of bounds? I am licensed to sell life, health and annuities. I have no interest to be in the securities space. I have contacts that I trust to bring in if there is a requirement for securities business with a client. I do not want to get myself tangled in a legal issue, so can I refer to myself as a consultant?

 

[scagnt83]

Recommending to take 401k funds, or Contributions, and put them into ANY other financial product (including life insurance)... without a doubt requires a Securities License. No fine line, no gray area. That is a Securities Recommendation.

(and that is why I am not a fan of many "programs" out there. most of them that pitch life insurance often promote taking future qualified contributions and using them for premium. ive even seen some that promote taking funds out of your 401k to fund life insurance. pure negligence and totally illegal without a securities license)


What you can and cant call yourself depends on what state you are in.

If you are hiding the fact your an insurance agent, you are fighting a losing battle. I have worked advanced markets plenty of times as an "insurance agent". When I describe who I am and what I do, the term insurance is almost always in the statement. But Im no longer in the business of convincing people they need what I do.

 

[scagnt83]

This is great stuff. If I refer to myself as a college funding and planning consultant am I in compliance or stepping out of bounds? I am licensed to sell life, health and annuities. I have no interest to be in the securities space. I have contacts that I trust to bring in if there is a requirement for securities business with a client. I do not want to get myself tangled in a legal issue, so can I refer to myself as a consultant?

Call your state DOI and ask. My bet is they say no. Especially if you have no designations related to college planning.

If the DOI does say yes; then you better check you carrier contracts about what titles they allow agents to use and what they dont allow.

 

[DHK]

Recommending to take 401k funds, and put them into ANY other financial product (including life insurance)... without a doubt requires a Securities License. No fine line, no gray area. That is a Securities Recommendation.

Nope. Depends on your state and your company's. Check with your annuity company compliance departments.

You can propose an alternative, but you cannot say "I recommend that you sell out x%...", or "you have too much risk", or "you should do...". You cannot say those things... until you're recommending the product and company itself.

You CAN say "You should liquidate enough assets to guarantee $x per month", or "You should transfer over however much you want to preserve in the down market years."

You can also say "I have an alternative to your securities portfolio. Let me show you how it works and you can decide."

 

[DHK]

I do not want to get myself tangled in a legal issue, so can I refer to myself as a consultant?

The term 'consultant' may be an issue, depending on which state you're in.

Some states say that you have to hold a series 65 license and be registered with an RIA in order to call yourself a planner, consultant, or advisor. I know Arkansas, Tennessee, and one of the Carolina's require this. There may be others, so you'd need to check.

One way "around" this... is to obtain a quality designation with the word 'consultant' in it. The ChFC designation is the abbreviation for "Chartered Financial Consultant" and it's an insurance/financial planning designation approved for use in all states. Of course, you're looking at about 2 years of studying for it.

ChFC | FINRA.org

Or, you can obtain a designation from the IARFC - they have both the MRFC (the accredited one) and the RFC (non-accredited, but for "experienced" agents and advisors).

 

[DHK]

This is great stuff. If I refer to myself as a college funding and planning consultant am I in compliance or stepping out of bounds? I am licensed to sell life, health and annuities. I have no interest to be in the securities space.

I'm not sure you can be okay with "college funding and planning consultant", particularly if you're outsourcing the college planning work.

Perhaps "Education Planning Liaison and Asset Optimization Specialist"? (Specialist or Manager are more "compliance friendly" than regulated terms, such as consultant.) Obviously no one is going to know what it means, but it does describe your role and your services.

 

[scagnt83]

Nope. Depends on your state and your company's. Check with your annuity company compliance departments.

You can propose an alternative, but you cannot say "I recommend that you...", or "you have too much risk", or "you should do...". You cannot say those things.

But you can say "I have an alternative to your securities portfolio. Let me show you how it works and you can decide."

My post specifically said "recommend". And that is exactly what many of these programs do (per the script they provide).

Even calling it an "alternative to someones securities portfolio" is most definitely a gray area. How do you know it's an alternative without knowing specifics about the securities they hold?

You can talk about your product and what it does and the benefits it provides. You cant compare it to their securities portfolio, or present it as a similar alternative.... especially if it is a Qualified Account and what you are pitching is life insurance.

 

[DHK]

Because we can talk about how securities work in general. Even the DOL allowed that exemption for annuity producers.

I'm not going to analyze their holdings. I'll talk about how the market and the portfolio generally will react (risk and volatility). I'll talk about their fees. DOL has a PDF about that specifically (fees and costs). There are other factors to talk about than just the portfolio within the 401(k) itself.