Official Now

[Franz Kafka]

Just got this e-mail. Let's see .. how much of annuity business are rollovers from variable contracts? About 90%? Enjoy.


"TO: All active life and annuity producers
FROM: New Business Services
DATE: January 4, 2012
RE: Offering investment advice
As a reminder, no producer is eligible to offer investment advice unless he/she is licensed as a variable contract producer. Producers should note that the recommendation to replace securities such as mutual funds, stocks, bonds, variable insurance products and various other investment vehicles defined as securities is considered the offering of investment advice.
If Assurity has knowledge that a variable contract is being replaced by an Assurity product and the producer is not licensed as a variable contract producer, the application and funds will not be accepted."

 

[VolAgent]

And that was from a company that doesn't have variable products. Rather out of left field, wasn't it? Why are they lining up to protect B/Ds and VA companies?

 

[sman]

I don't think they are attempting to protect B/D's and VA companies, I think they are protecting themselves. It appears some states are starting to classify this as a securities transaction (transferring money from a security to a non-security product). Therefore, an agent/advisor will at the very least need a Series 65 in order to be able to advise a person to transfer money from stocks/mutual funds/VA into an annuity. If you think SEC 151A is dead, you are sadly mistaken. Whether or not any of us agree with it, due to the large amounts of money being moved to index annuities (some ethical, some not) regulators will continue to get involved.

Personally, I don't see it as a bad thing that agents/advisors should have a Series 65 in order to provide investment advice.

 

[DHK]

That email didn't say anything about a series 65.

It says "Variable Contracts". To my knowledge, that's only available if you are a series 6 or 7. You cannot sell nor be licensed for variable contracts with only a series 65.

So, they're all about protecting themselves and their B/D clients.

 

[xrac]

That email didn't say anything about a series 65.

It says "Variable Contracts". To my knowledge, that's only available if you are a series 6 or 7. You cannot sell nor be licensed for variable contracts with only a series 65.

So, they're all about protecting themselves and their B/D clients.

DHK is correct. This whole battle is that FINRA will not rest until they control everything.

 

[iceco1d]

That email didn't say anything about a series 65.

It says "Variable Contracts". To my knowledge, that's only available if you are a series 6 or 7. You cannot sell nor be licensed for variable contracts with only a series 65.

So, they're all about protecting themselves and their B/D clients.

That is not true. There are no load VAs you can sell with just a Series 65 (Jefferson National is the biggest, I believe).

Also, that email mentioned providing ADVICE. A Series 6 or Series 7 does not give you the ability to offer investment advice. That only comes from a Series 65 or Series 66 license.

Finally, I can tell you this, the biggest issuers of indexed annuity contracts, are basically nobody in the variable annuity game. Indexed annuities are mostly sold by insurance agents that don't hold securities licenses. The indexed annuity companies are not trying to protect b/ds, they know their bread is butter by insurance agents. They are obviously scared of being sued or fined by regulators.

 

[scagnt83]

That is not true. There are no load VAs you can sell with just a Series 65 (Jefferson National is the biggest, I believe).

Also, that email mentioned providing ADVICE. A Series 6 or Series 7 does not give you the ability to offer investment advice. That only comes from a Series 65 or Series 66 license.

Finally, I can tell you this, the biggest issuers of indexed annuity contracts, are basically nobody in the variable annuity game. Indexed annuities are mostly sold by insurance agents that don't hold securities licenses. The indexed annuity companies are not trying to protect b/ds, they know their bread is butter by insurance agents. They are obviously scared of being sued or fined by regulators.

Ditto. Except having the ability to sell securities gives you the ability to give advice about them (you just cant charge a fee for the advice, you have to take commissions as comp)

On the flip side, having an insurance license allows you to give advice on insurance products.. including fixed annuities... but according to some states not if you dont hold a securities license... but a stock broker with no insurance license can move $ from IAs all day long.... talk about a double standard..


Just have the client get a check from the IC and send it in... or will they get you on that too?

 

[Franz Kafka]

If this sets precedence for other carriers, we need to figure out ways to continue our annuity business. I've been using different methods so the transfer or rollover would not be directly from security accounts but they're not foolproof. Maybe getting licensed as an RIA is the only way to go.

 

[iceco1d]

If this is going to be the trend, getting your S65 license and forming your own RIA is definitely the way to go. Being an RIA that doesn't manage any money is super easy and costs next to nothing.

You'd basically be organized as one of those fee-only financial planners that charges by the hour. You don't have discretion. You don't have custody. In fact, you have $0 AUM. Your ADV would be a cake walk.

If anyone has questions on forming an RIA, feel free to post them here or PM me. I'm happy to help (and if I can't, I can put you in touch with someone that can).

 

[scagnt83]

If this sets precedence for other carriers, we need to figure out ways to continue our annuity business. I've been using different methods so the transfer or rollover would not be directly from security accounts but they're not foolproof. Maybe getting licensed as an RIA is the only way to go.

Franz,
Was that a national letter or state specific?
What state are you in?