I have been told that I specialise in college savings, retirement savings, life insurance and long-term care strategies, but in reality I also specialise in selling financial products. As trustees, you must be in the best interests of your customers when they sell their insurance. The incentives that the life insurance companies they represent provide and give to intermediaries make it difficult to escape this massive conflict of interest.
When advising customers on what type of product they should buy, how much they can buy and from which company they should buy their insurance product, the remaining fees (i.e. Your RIA receives the fees and commissions that the customer pays and that you and your affiliates receive as commissions. Fees, by definition, mean that you do not earn commission, but may not be able to earn commission.
Commissions can be a conflict of interest for a trustee, such as incentives based on the sale of a particular product rather than expanding a client portfolio.
On an advisor’s fee basis, an adviser is not eligible under this definition. If you work for a firm with 100 advisers and only one sells insurance, that firm will call itself a fee-paying adviser. This refers to a financial professional who sells securities as a kind of advisor, broker-dealer, etc.
If you are working with an adviser trying to sell insurance to you, ask if they are bound by fiduciary standards for life insurance transactions and see how they are paid based on the different policies they offer you. The sale of insurance does not require you to look for your best interests; it is the sale of insurance for you.
In the current market for life insurance products, opinions on death and medical history continue to differ, which could play a role in discouraging financial advisers from participating in the sale of life insurance products. Some agents take a less comprehensive approach to knowing their clients “true medical histories, and this approach puts agents (and in many cases life insurance applicants) at a significant disadvantage. Other factors also play a role in the adviser’s decision to avoid discussions about life insurance.
There are many reasons for financial advisors to consider life insurance selling as part of the services they offer their clients. The sale of other life insurance products, such as maturity insurance, has the potential to eat up the investment budget.
There are many reasons why financial advisors may consider selling life insurance as part of the services they provide to their clients, including the ability to meet their clients’ needs, comprehensive asset planning services and the ability to earn a commission. The disadvantages include challenges for consultants to raise the issue of life insurance with their clients, and the need to become experts in a new field.
If you are a licensed insurance agent, it is a good time to think about becoming a financial planner. Life insurance companies continue to set quotas for Life insurance carriers because life insurance is undersold in the US and financial planners and financial reference systems make life insurance sales easier. Many agents in captivity, such as Farmers, State Farm and Allstate are licensed to sell life insurance and annuities of all kinds.
There is a good chance that you will eventually need life, disability or long-term care insurance depending on your particular circumstances. As a financial adviser, you can help new and existing insurance customers make smart financial decisions. You have done your job, but we have provided the necessary steps and knowledge to start selling life insurance and financial planning.
The problem arises from the implementation of agents who make more money by selling you certain products through others. The problem is that brokers often sell higher fee policies or pricing options that are less suitable than what is available to get a higher commission.
Bottom line is that if an RIA wants to sell fixed income insurance products, it does not need a broker-dealer relationship and can operate through BGA relationships. If the goal is to sell a fixed product solution, the RIA should work through a brokerage or general agency (BGA). A BGA is similar to a broker / dealer in that it operates in the fixed income insurance product sector.
On the other hand, for the sale of insurance products, it is necessary to have a life and health insurance licence from the State and to be contracted by the insurance company to sell its products. This raises the question of how RIA is appointed by a company that sells insurance to manage product selection for a wide range of companies. An insurance agent can sell fixed annuities and other insurance products through an agent who purchased Series 7 license, or he or she can sell variable annuities.
We classify financial advisors according to their remuneration structure (whether they earn commissions, lump sum fees or other payment methods), trust status and registered investment advisor (RIA) status.
In order to sell investment products, advisors must pass the appropriate FINRA-regulated exam, such as the SIE Series 6 exam, in order to acquire their certification. Consultants wishing to sell pensions and other insurance products must also have a government insurance licence in the state in which they intend to sell these products. In some states, the CFP board is required to check whether a planner has sold insurance in the last year he wanted to sell or in the future, and whether he receives a subsequent insurance commission.
Peeling back the onion on CFP boards can cause tears of frustration among planners who use the label of fee and commission because they work for brokerage and dealer firms where they charge fees for investment advice but are not directly tied to insurance companies. Brokers are regulated separately and are subject to different supervisory structures than insurers, which are regulated from state to state. CFP boards take into account deviations from state rules, Shaw said, but the flexibility granted to planners can be enacted by state law without being tied to an insurer.
