Regulations Batter Independent Agent Channel

[SamIam]

Here is the article, I don't look at this as a good sign.

Regulations Batter Independent Agent Channel - InsuranceNewsNet

 

[DHK]

Insurance brokers, who are authorized to sell mutual funds in addition to insurance and annuities don't collect an override, or commission, from insurers.

This makes absolutely NO sense to me whatsoever.

Since this assumes that an insurance broker is also authorized (registered) to sell mutual funds... then we can assume that the insurance broker is simply a life agent who is also registered to sell variable contracts and mutual funds with a Series 6 & 63. They sell insurance, annuities, mutual funds, and variable contracts FOR COMMISSION. The insurance or investment company pays out a commission to the brokerage firm, who then pays the securities licensed insurance agent.

Chow’s research, based on interviews with 18 life and annuity insurance companies, found that all the companies sold life and annuity products through five different channels: independent agents, broker-dealers, investment advisors, career or captive agents and multi-line exclusive agents.

Half of the insurance companies reported that they offer the independent agent channel for distribution and half of the companies also reported that they use an insurance broker-dealer for life and annuity distribution.

It really also depends on the kinds of products they are manufacturing and distributing... and HOW they are distributing them.

Allianz has both variable and fixed indexed annuities. Of course they are going to market through broker/dealers... for their variable contracts. And they market fixed indexed annuities through their contracted IMOs for insurance agents. However, I don't ever recall my old Allianz Variable wholesaler telling me anything about their fixed indexed annuities back in the day.

New fiduciary rules by the U.S. Department of Labor raising investment advice standards for the sale of financial services products into retirement accounts are widely seen as burdensome for independent insurance agents.

You mean you have to know your products? You mean you have to keep your documentation? No... that can't be all there is. Of course, there's the BICE clause talking about a fiduciary relationship between the agent, the client, and the financial services company... and for independent agents, we don't know who that company is (yet). The hard part independent agents have right now, is who is going to be taking on that fiduciary liability with us in regards to insurance products and qualified plans? We don't yet have a satisfactory answer yet.

I'd rather wait and get more clarification on this rule before trying to find a broker/dealer to join and split commissions with. Because for everything you sell that you want a company to "endorse"... they have to be compensated in some way for taking on that liability. That's the economics behind this, if you join a broker/dealer. Forget about having freedom of choice of contracts to sell... you'll be limited to whatever the broker/dealer lets you sell. I predict that it might end up being the same with RIAs.

 

[scagnt83]

Forget about having freedom of choice of contracts to sell... you'll be limited to whatever the broker/dealer lets you sell. I predict that it might end up being the same with RIAs.

It is already starting to happen with RIAs that are affiliated with a B/D. It even filters down to other persons or entities affiliated or "directly related" to the business.

To put that into plain english, it can filter down to insurance only agents at firms who do BD/RIA/Insurance business all under one roof.

 

[walthamny]

If you are a RIA firm part of BD, you will have some issues with the DOL regulations depending on how it gets implemented. For independent RIA's the new rules hardly add any burden.