Should Life Insurance Agents Become Financial Planners?

[VolAgent]

I have some contracts through him some of my lower contracts, I do not feel as much of a need to put business through them now that I do not have access to TPG.

So, not only are you not paying for TPG, but you also are putting less business through him? At least in your case, it seems to have completely backfired.

 

[scottstreet]

Funny how all the folks who defended his being a rude jackass to people were eventually casualties of the rude jackass. You can have all the knowledge in the world but if your incapable of a civil conversation when there is a different opinion you will have a lonely site....My enduring memory of that site was him going apeshit at someone who had a different opinion about the best home printer...still makes me smile...

 

[briko3]

Funny how all the folks who defended his being a rude jackass to people were eventually casualties of the rude jackass. You can have all the knowledge in the world but if your incapable of a civil conversation when there is a different opinion you will have a lonely site....My enduring memory of that site was him going apeshit at someone who had a different opinion about the best home printer...still makes me smile...

The problem is it's hard for most people to start paying for something that's always been free. It's also hard to pay for something when you feel like you added to the discussions.

 

[VolAgent]

Funny how all the folks who defended his being a rude jackass to people were eventually casualties of the rude jackass. You can have all the knowledge in the world but if your incapable of a civil conversation when there is a different opinion you will have a lonely site....My enduring memory of that site was him going apeshit at someone who had a different opinion about the best home printer...still makes me smile...

I'm not sure how many really defended him. They just told people how it was and if they wanted some of his knowledge, to play by his rules until they got what they wanted.

I've said all along, there was some great knowledge on that site, but he also slung some BS. I believe just about everyone who was active on both sites was eventually kicked off TGP for disagreeing with Rick.

 

[yorkriver1]

Does fiduciary vs suitability enter into the choices? The new rules being discussed by DOL make me curious as to how a "conflict of interest" might affect a captive agent producer with one company's products to sell.

 

[DHK]

I've had several conversations on this topic. According to John Olsen (expert witness regarding annuity and life insurance sales), he says that fiduciary duty is restricted to selling the best policies of what you have available to sell.

Now John Olsen is not an attorney, nor a state regulator... but it does make some sense.

 

[Norwayguy]

I've had several conversations on this topic. According to John Olsen (expert witness regarding annuity and life insurance sales), he says that fiduciary duty is restricted to selling the best policies of what you have available to sell.

Now John Olsen is not an attorney, nor a state regulator... but it does make some sense.

Define best ie lowest premium best conversion option cash value.

 

[DHK]

Define best ie lowest premium best conversion option cash value.

According to the comments here:
ProducersWeb - Retirement - A stand-in for the fiduciary standard?

David, I share your concerns. Insurance pros generally have NO problem with the obligation to work in the client's best interest OR to keep that client's interest ahead of their own. But the devil is in the details. If I sell a life insurance policy in which the premium is higher than some hypothetical "better" plan, who is to determine which policy is "better" for that client in that specific facts situation? And how will that be done?

As Dick Weber is always saying, buying life insurance isn't like buying a refrigerator. Premium (price) CANNOT be the sole metric by which the policy's worth is measured. Neither, for that matter, is the combination of premium, cash value, and death benefit. Most life policies sold today are "indeterminate premium" contracts; many are Indexed UL. There are just SO MANY ways to structure such a product that I doubt that ANYONE can state, with any authority or credibility, what the "best" way is, or if a given structure is necessarily "better" than another (except, of course, if one uses a reliable method of determining whether the policies being compared are likely to produce the benefits illustrated.

Now, my concerns here rest upon the worry that application of a fiduciary standard to my insurance sales activities will carry the baggage of "did he sell the BEST policy?". Personally, I think that's useless baggage, as it's a question that cannot be answered reliably. Rather, I think that the application of fiduciary duty will, and should, focus on the PROCESS that the agent in question used to determine the policy recommended. THAT can be assessed reasonably. But, even there, questions remain. Does an agent who sells only one company's policy fail the fiduciary standard? Sect. 913(g) of the Dodd-Frank Act says that this will not "in and of itself" constitute a breach of fiduciary duty. Nor will receipt of commissions, "in and of itself", be such a breach. But a reading of that section should make clear to anyone that it leaves a lot to be determined later.

Bottom line: I have no objection to being held to placing my client's interest ahead of my own (I've been doing that for decades), nor in having to demonstrate, if required, that I used diligence in making my recommendations. But I'm all too aware of the sharks circling the fiduciary debate for whom the vagueness of the standard (as if there is a single standard that can cover those who give investment advice and who sell products, where the advice is ancillary to the sale) is an invitation to a feeding frenzy.

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The steps I've been taking are to use a simple 3-page presentation format in presenting my recommendations.

Page 1: Discussion and priority summary (this shows that I've been listening as well as making additional recommendations of areas to address).

Page 2: Current situation.

Page 3: Proposed solution based on current assumptions.

The advantages to doing this are:
1) Documented process
2) By re-reviewing their priorities, you are getting them to re-connect with what their objectives were at the time of the prior appointment.
3) You are demonstrating (with disclosures) how your recommendation will make them better off.

The beginning of this is rough - start at the 3:00 mark - but this is the general idea:
How to Close 9 out of 10 - Insurance Pro Shop

 

[AssociatePI.com]

I'm personally not a fan of the CFP. When I was deciding between CPCU in the insurance world or CFP to become a financial advisor I talked to a lot CPCU and CFP designation holders. I found most of the CFP regretted their choice and ended up leaving the financial advising position because it was too much sales work. Kind of turned me off of the CFP lifestyle

 

[scottstreet]

Yes, life insurance sales involve "sales work".....in other news the sun rises...