How Do You Sell Annuities

[padthaiforlunch]

My understanding is that if I wish to give securites advice and an indy producer I had better

a) become and RIA

or

b) get hooked up with a b-d.

Both require exams and compliance. Start-up costs for such endeavors ~~$4k-10K.

Min. requirement in business account to register in my state is $35k.

Would just as soon learn how to talk around the subject and stay within the law. Anyone have some guidelines?

 

[James]

My understanding is that if I wish to give securites advice and an indy producer I had better

a) become and RIA

or

b) get hooked up with a b-d.

Both require exams and compliance. Start-up costs for such endeavors ~~$4k-10K.

Min. requirement in business account to register in my state is $35k.

Would just as soon learn how to talk around the subject and stay within the law. Anyone have some guidelines?

Well, don't give advice directly about Securities, yet you can talk about investments. I wouldn't lose sleep over it, just as long as you are upfront about what it is you're selling. What I find working, is compare an Annuity/WL/UL or what have you, directly too what the client is making off their investments, as in MF's or what have you. What you have to be careful about is comparing Apples to Apples, not Apples to Oranges. I really can't imagine this being a problem.

 

[Angio333]

If I understand it correctly, the 65 will make you a RIA. You won't need an account at a broker since you aren't selling anything, just giving advice.

THis is true in Ohio and from my understanding of the Series 65 test/license.

 

[indaville]

Well, don't give advice directly about Securities, yet you can talk about investments. I wouldn't lose sleep over it, just as long as you are upfront about what it is you're selling. What I find working, is compare an Annuity/WL/UL or what have you, directly too what the client is making off their investments, as in MF's or what have you. What you have to be careful about is comparing Apples to Apples, not Apples to Oranges. I really can't imagine this being a problem.

It depends on the state in which you live. If you are liquidating a security and investing that money into an annuity then most regulators will argue that you are giving securites advice. Here in Kentucky if you have clients that are liquidating their investments for your annuity and you do not have a securities license and the regulators find out, then they are going to pull your insurance license. I would recommend getting the RIA because it will help prevent this type of harassment. I am currently securities licensed with a B/D but I am opening my own RIA by the end of the year.

Matt

 

[padthaiforlunch]

If I understand it correctly, the 65 will make you a RIA. You won't need an account at a broker since you aren't selling anything, just giving advice.

THis is true in Ohio and from my understanding of the Series 65 test/license.

You should check with your state. Just because I pass my insurance test doesn't mean I'm licensed.

Also, you are selling something -- annuities. Just because your not being paid directly by the client doesn't mean your not giving investment advice for compensation.

My understanding is if you do an annuity seminar and include graphs of, say, nasdaq and how it still hasn't recovered, some nasd a-hole is going to try to say you are practicing w/o a license.

 

[Mr. Bill]

Yep, check with your state. Having a 65 does NOT make you an RIA - the RIA is a state process (until you hit a certain level of assets under management). A B/D is there for you to share commission payouts on securities sales - you don't need it for money managers who will allow you to be an IAR (independent advisory representative) of their RIA, which many of them will.

The problem is always the client - in that, if the client says you told them to sell their securities (from their brokerage account, say) in order for them to put into a FIA, for example, and you don't have the appropriate documentation, then you would be found to have been giving securities advice without a license, and that would be bad......

So, just get the documentation!

 

[Agent Jeff]

What is that rate of a typical fixed annuity (that would pay an agent a commission) these days? Is it so much better than a regular CD that it is worth all the disadvantages that go with it?


Also, are insurance agents allowed to recommend one fixed annuity over another for no other apparent reason that it pays a better commission?

 

[senior-advisor-indiana]

What is that rate of a typical fixed annuity (that would pay an agent a commission) these days? Is it so much better than a regular CD that it is worth all the disadvantages that go with it?


Also, are insurance agents allowed to recommend one fixed annuity over another for no other apparent reason that it pays a better commission?

Most fixed annuities are paying aound 5%. That is tax deferred though. If you are in a 28% tax bracket then that 5% annuity is getting you the return of a CD paying 6.94%. I don't think any CD's are paying that. I am not sure what you think "all" the disadvantages are in annuity. I would rather buy a 5yr annuity paying 5% then a 5 yr CD paying 5.5%.

 

[senior-advisor-indiana]

You can recommend any annuity that you want. The agent is the one that has to lose sleep over selling a lesser product.

 

[James]

It depends on the state in which you live. If you are liquidating a security and investing that money into an annuity then most regulators will argue that you are giving securites advice. Here in Kentucky if you have clients that are liquidating their investments for your annuity and you do not have a securities license and the regulators find out, then they are going to pull your insurance license. I would recommend getting the RIA because it will help prevent this type of harassment. I am currently securities licensed with a B/D but I am opening my own RIA by the end of the year.

Matt

While I'm not going to argue what you said here is incorrect. In fact I don't know how a Insurance Agent can liguidate a Securities Account? I would agree though, that if you are going to start taking money out of a IRA or any Tax Exempt Account, send them to a person knowledgeable on that process and can do it while giving the client the best advantage with taxes or penalties. Now if that money is in a Mutual Fund or Stocks that are not in a tax advantage account, I don't see how any regulator would have a say in it?

Now I understand that the BD's are upset, as they see Billions of dollars leaving MF's and other vehicles as people near retirement. They, the BD's are pushing for a near virtual Lock Box of money in their care, but I don't think in the end these issues will hold water. Let us face it, the NASD is not the AMA! I would love to be in a courtroom listening to a BD reprensentatve or a regulator, how people loose control of their money once they place it in a Stock or MF!

One of my favorite expressions, "Lock up this years Gains in a Safe Account!".