The Future of Selling Life Insurance ?

Before the DOL ruling, we had this issue called the "Source of Funds" issue. The "Source of Funds" issue was whether or not an insurance-only agent can recommend someone to liquidate their portfolio and place the proceeds into a fixed indexed annuity.

Now, if you're reading carefully, you'll notice that you CAN'T do that. However, you can present an alternative for the account. You don't give an analysis of the holdings, talking about "how much risk you have", etc when you are not licensed or registered to give such advice.


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Thanks DHK....you're very helpful!
 
Learn how to talk about fees and expenses in a general way:
- Mutual Fund A-shares vs B-shares vs C-shares
- Mutual Funds with Insurance (variable annuities)
- Mutual Funds with active management (asset management services).

(snip)....

Thank DHK,

Wow...for Christ sake, this rule is scaring the hell out of most companies and agents who sell life insurance.

-So, in a nutshell you are saying that a life ins. agent should disclose;
  • that you are not a RIA
  • that you are not licensed to give investment advice
  • that you are only presenting an alternative
  • that you can give your opinion, but not necessarily "analysis their portfolio?"

I think that's the jest of it?

* Also, get every disclosure signed that says "i'm not an investment advisor" signed.

???

I think i got it right??
 
I don't think it's scaring agents. It depends on where you're coming from.

I've been securities licensed, so I know what I can and cannot do.

The key is to clearly disclose in your printed and digital marketing materials that you do not provide advice regarding securities, then define exactly what that advice is: buying, selling, holding recommendations, or analysis.

I have an "Appointment confirmation" sheet that I have formatted in the form of a resume. It's rather impressive, but at the bottom is where I put that disclosure. I also put the disclosures on my social media pages, social media profiles (LinkedIn, etc.). In fact, on my LinkedIn profile, I do list that I have held the Series 7 & 66, but they are "formerly held".

But it's not like you have to say "I can't do this" and "I can't advise you in that"... almost like you're apologizing for the lack of licensing. You don't want to feel or do that.

Now, if you want to learn how to compare fixed products to market-based products... I'd check out the Insurance Pro Shop's online video training for $35/month. It's a great resource: How To Market and Sell Insurance... Tip & Training

No, you don't need to have a disclosure signed, although some agents may choose to do that. (Something like that MAY be included in the BICE from the DOL, but we'll see.) That may be going overboard. You just need to not give securities advice, but provide an alternative and let the client decide what's best for them.
 
I don't think it's scaring agents. It depends on where you're coming from.

I've been securities licensed, so I know what I can and cannot do.

The key is to clearly disclose in your printed and digital marketing materials that you do not provide advice regarding securities, then define exactly what that advice is: buying, selling, holding recommendations, or analysis....(SNIP)

Thanks very much DHK

LET me play devils advocate with you (if i may).
"The competition (securities dealers, series 65 holders, etc.) i think, will be quick to point out that "You" (or i) aren't licensed to sell securities and therefore aren't offering clients all the available options in the market place. AND chances are they are also licensed to sell Life Insurance too. And because of such, they are in a better position to help them (etc)."​

What would your response to this be?


Anyway, thanks Man. You're a tremendous help!

Mike
 
My response would be something to the effect of:

"There's nothing wrong with that business model. Many advisors like serving their clients in that way. I'm not in the "money management" business as I'm in the financial solutions business. The solutions I offer have promises, protections, guarantees, and certainty with them. I've found that when I help a client with those things, I earn plenty doing business this way as a specialist, that I don't have to bother with the things I cannot predict or control. I can leave that to other people who are more inclined to do business in that way."

"The only downside that I've experienced to doing business in this way, is that some people won't do business with me because I don't offer what they want. That risk is mine, so I just need to see more people, show them what my solutions do, and let them decide for themselves. I do find that most people DO need parts of their financial portfolio they can count on... and the products and services I provide do just that."

Btw, "jack of all trades - master of none" certainly applies here, but I'd rather talk myself up as to why I do business the way I do, rather than degrade the competition.
 
My response would be something to the effect of:

"There's nothing wrong with that business model. Many advisors like serving their clients in that way. I'm not in the "money management" business as I'm in the financial solutions business. The solutions I offer have promises, protections, guarantees, and certainty with them. I've found that when I help a client with those things, I earn plenty doing business this way as a specialist, that I don't have to bother with the things I cannot predict or control. I can leave that to other people who are more inclined to do business in that way."

"The only downside that I've experienced to doing business in this way, is that some people won't do business with me because I don't offer what they want. That risk is mine, so I just need to see more people, show them what my solutions do, and let them decide for themselves. I do find that most people DO need parts of their financial portfolio they can count on... and the products and services I provide do just that."

Btw, "jack of all trades - master of none" certainly applies here, but I'd rather talk myself up as to why I do business the way I do, rather than degrade the competition.


great response... but to go bakc to your earlier post.. is there a reason why you dropped the securities license.. Couldn't you still keep it and not use it?
 
great response... but to go bakc to your earlier post.. is there a reason why you dropped the securities license.. Couldn't you still keep it and not use it?

No. FINRA does not allow the parking of securities registrations. Also, it costs money to keep it active, quite a bit, for both the holder and the firm.

If you want to keep your securities license active, you better use it.
 
great response... but to go bakc to your earlier post.. is there a reason why you dropped the securities license.. Couldn't you still keep it and not use it?

First - life happened where I was no longer with a B/D, so my 7 & 66 are now long expired. It wouldn't take much to retake exams, but these licenses are no longer necessary for my financial planning philosophy.

And even if there's "no quota", there's still a regulatory quota of sorts - you have to use them to keep them.

The only licensing I still consider would be a Series 65 with tactical asset management. However, my problems there would be calls from clients when the market tanks and how their holdings would be... as well as the additional time for each client. After all, they're paying for ongoing advice... and I'd rather sell annuities than do quarterly "check in" calls. I still think about it... but I'm not quite ready to pull that trigger yet.

And, like broker licenses, if you don't use them... you're really not viewed as a proper fiduciary, even with all the Outside Business Activity disclosures.
 
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