How Do You Sell Annuities

[Mr. Bill]

I'm not certain what you mean, any account transfer form offers a liquidation option. And yes, that's what the regulators are looking for. Unless the insurance industry backs down, I have to agree that FINRA and the SEC are in a bit of a weaker position, but it doesn't mean they won't work with insurance departments when necessary, as an example, Dennis Tubbergen's boy in Hawaii:

starbulletin.com | News | /2007/09/08/

 

[James]

I'm not certain what you mean, any account transfer form offers a liquidation option. And yes, that's what the regulators are looking for. Unless the insurance industry backs down, I have to agree that FINRA and the SEC are in a bit of a weaker position, but it doesn't mean they won't work with insurance departments when necessary, as an example, Dennis Tubbergen's boy in Hawaii:

starbulletin.com | News | /2007/09/08/

Investment adviser charged with fraud


STORY SUMMARY »

Federal and state authorities say a Honolulu investment adviser made millions by fraudulently gaining access to the financial accounts of retirees and other older investors.

Mark Teruya, 35, and his company, Senior Resources of Hawaii Inc., are accused of securities fraud violations, according to the U.S. Securities and Exchange Commission. Hawaii's securities commissioner, meanwhile, issued a preliminary cease-and-desist order against Teruya and his firm.

The SEC alleges Teruya wined and dined potential clients, then induced them to sign fraudulent documents giving him access to their accounts. Once he had access, the SEC alleges, he sold them securities without their knowledge and made $2 million in commissions on other unauthorized sales.

I don't get your point? This is a fraud case by a Investment Adivser? And it appears he was selling Securities and not insurance annuities. Okay, point is to stay away from IA's?

 

[Mr. Bill]

Okay. Here's the deal. he was working as an IAR of Dennis tubbergen's company (a B/D). He would get assets in, then invest in FIA's apparently without client knowledge or consent.

From a process standpoint, unless you're an IAR or RIA, or securities licensed, you can get into all sorts of trouble if your client sells/liquidates their securities account in order to free up cash to purchase an annuity. All I'm saying, and the point of pointing to the article, is that the Organizations (FINRA, SEC, State INsurance commissions) aren't playing dumb any longer. Just as the states are trying to shut out phony designation marketing, so will FINRA and the SEC. The case against Teruya is simply an example of how the orgs worked together. Normally you wouldn't see this because FINRA and the SEC tend to "look down" on insurance and insurance products, and lets not forget the state employees who work at the insurance commissions. Quite frankly, it's a viewpoint that is not shared by many.

In other words, simply protect yourself!

 

[James]

Okay. Here's the deal. he was working as an IAR of Dennis tubbergen's company (a B/D). He would get assets in, then invest in FIA's apparently without client knowledge or consent.

From a process standpoint, unless you're an IAR or RIA, or securities licensed, you can get into all sorts of trouble if your client sells/liquidates their securities account in order to free up cash to purchase an annuity. All I'm saying, and the point of pointing to the article, is that the Organizations (FINRA, SEC, State INsurance commissions) aren't playing dumb any longer. Just as the states are trying to shut out phony designation marketing, so will FINRA and the SEC. The case against Teruya is simply an example of how the orgs worked together. Normally you wouldn't see this because FINRA and the SEC tend to "look down" on insurance and insurance products, and lets not forget the state employees who work at the insurance commissions. Quite frankly, it's a viewpoint that is not shared by many.

In other words, simply protect yourself!

Totally agree, "CYA", should be everyones motto! Be upfront and honest about the product. If used correctly, the annuity is a strong product in its own right, as it has been for how many years now???

 

[JMO Fan]

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

Similar in Missouri. State securities says they'll pull the insurance license of anyone recommending annuities over investments (including CDs) without a securities license. New (2007) Missouri law tells state insurance director to work with SEC, FINRA, & state securities -- bulletin/rules may be coming.

 

[Winter_123]

SAI had a post in another thread wishing for more discussion on annuities. So I'm curious about how you all market for them.

I have seen programs for seminars, and while I imagine I can put together a powerpoint presentation I don't want to spend $$$$ on a seminar at this time.

With all the senior predation and NASD BS, how do you talk about market risk without giving investment advice and running afoul?

My primary market for annuities is business clients and anyone I run across who has a 401k at an old employer.

But I am also appointed to sell birthday insurance, and I intend to use it as a loss leader (hopefully, break-even) with seniors so I can do a financial review and discuss annuities, ILIT's, and pooled income funds with them.

Is anyone targeting the Boomer market, or cold calling? How about the 403b market?

With your clients, you can talk generically at the 100,000 foot level about the fact that mutual funds and stocks have risk and can go all the way down. You can also ask the client if they are happy with the returns that they have been getting in the market and are comfortable with the risk involved. You can then show them how annuities address some of the general concerns that people have about securities investments, and then if the client chooses to go with an annuity then that is fine and compliant.

Where agents get in to trouble is when they delve into the clients portfolio and start talking specifically about how good a particular securities investment is and is not and then make a recommendation that they liquidate and go into an annuity. You cant make that kind of recommendation without a securities license. You can however ask the client if they are happy with how their current investments have been performing and let them reach a conclusion on their own. All of the annuity companies have transfer paperwork. You dont need a securities license to have the client fill out transfer paperwork and have their funds transferred to the annuity company. In fact you would get in very deep trouble right off if you had them liquidate first just to get around transferrring securities funds. The IRA and 401k funds have to be rolled to avoid the hits.

Winter

 

[indaville]

With your clients, you can talk generically at the 100,000 foot level about the fact that mutual funds and stocks have risk and can go all the way down. You can also ask the client if they are happy with the returns that they have been getting in the market and are comfortable with the risk involved. You can then show them how annuities address some of the general concerns that people have about securities investments, and then if the client chooses to go with an annuity then that is fine and compliant.

I think you can get into trouble doing this as well. The regulators would more than likely view this situation as giving securities advice. You are comparing the annuity to mutual funds/stocks. I am not saying I argee with the regulators, but they don't always see things the same way a producer does.

Matt

 

[padthaiforlunch]

I think you can get into trouble doing this as well. The regulators would more than likely view this situation as giving securities advice. You are comparing the annuity to mutual funds/stocks. I am not saying I argee with the regulators, but they don't always see things the same way a producer does.

Matt

Yeah, this is my concern, but I'm not sure how much is based in regulator practice. I have a sneaking suspicion that if you take the mile high approach you are ok, but that NASD (FINRA) is trying to muddy the waters and scare us insurance types away from their AUM.

 

[James]

I'm not sure, but can any one give specific law stating that the client can not move their money out of securities without permission? This is how I see it, no matter how anyone attempts to frame this issue. I do believe if no fraud is involved one would be hard to come up with a Judge that will rule an individual loses a portion of their rights to their money. As in needing permission from a person that is securities license before they can access their own money. I think by simply asking if a Realtor can or can not sell a house if that money was coming in whole or part from securities held by the client, and if that would be allowed to be done without a Securities Rep's permission. Or say a CD, any thing you like, is this just specific to insurance products? If so, as I believe this is nothing but a money and power grab by the SEC or FINRA that will not hold up in court.

Now I would assume there are no other issues, such as selling a 15 year annuity to a 80 year old. I'm coming from the aspect that the sale is or would be consider practical or prudent by a normal person.

 

[Winter_123]

I'm not sure, but can any one give specific law stating that the client can not move their money out of securities without permission? This is how I see it, no matter how anyone attempts to frame this issue. I do believe if no fraud is involved one would be hard to come up with a Judge that will rule an individual loses a portion of their rights to their money. As in needing permission from a person that is securities license before they can access their own money. I think by simply asking if a Realtor can or can not sell a house if that money was coming in whole or part from securities held by the client, and if that would be allowed to be done without a Securities Rep's permission. Or say a CD, any thing you like, is this just specific to insurance products? If so, as I believe this is nothing but a money and power grab by the SEC or FINRA that will not hold up in court.

Now I would assume there are no other issues, such as selling a 15 year annuity to a 80 year old. I'm coming from the aspect that the sale is or would be consider practical or prudent by a normal person.

Some of these issues are well settled. Every large annuity company receives millions of dollars each day that is being transferred in from clients who previously had their funds in stocks and mutual funds. The transfer was accomplished by sending the transfer paperwork that is part of the application packages. It is filled out by the agent and signed by the client and away it goes. That is just normal everday business. No securities person needs to be involved for the client to transfer their own money or for the insurance licensed agent to assist. The broker dealer may send their own paperwork to use but that can still be filled out by the client or by the agent for the client to sign.

Winter