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socalfa
Greenhorns Joined: Jun/08/2017 Status: Offline Points: 35 |
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Posted: Jun/08/2017 at 1:28am |
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I'm an advisor 2 years into the business. Series 7, 66, work for a large insurance-based financial company.
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RipRock
Senior Member Joined: Oct/29/2013 Status: Offline Points: 1807 |
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Does DOL let insurance agents say they are financial advisors or is that still not fixed? |
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socalfa
Greenhorns Joined: Jun/08/2017 Status: Offline Points: 35 |
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I'm a fiduciary who also happens to hold L&H insurance licenses.
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brome90
Member Joined: Mar/12/2014 Status: Offline Points: 420 |
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I can't wait to read what is to come.
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missionshooter
Senior Member Joined: Feb/12/2014 Status: Offline Points: 6136 |
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Preach It Brother! |
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PEACH_cm
Senior Member Joined: Jan/16/2013 Status: Offline Points: 7184 |
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socalfa
Greenhorns Joined: Jun/08/2017 Status: Offline Points: 35 |
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Won't argue the semantics, but when the head honcho from home office compliance comes and says "you're a fiduciary now and will be treated as one" I say "ok".
Not here to argue with the veterans, just want to read and learn.
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Well it's gonna happen either way. Just FYI |
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RipRock
Senior Member Joined: Oct/29/2013 Status: Offline Points: 1807 |
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Hmmm, maybe I am wrong and you are not required to sell ("help people") insurance. In your hiring agreement are you not obliged to have a minimum of activity in insurance sells? |
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The DOL does not regulate insurance agents. That's what state departments of insurance do. The DOL regulates qualified plans.
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Maybe I am wrong and you are not required to sell ("help people") in selling securities. By FINRA requirements, if you don't do any securities sales, you are then "parking" your licenses? Why Series 7 Brokers Legally CAN’T Be Client Fiduciaries Without DoL FiduciaryEdited by D.H.K. - Jun/08/2017 at 11:35am |
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bagua
Member Joined: May/03/2011 Status: Offline Points: 268 |
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Socalfa this isn't a shot at you. It's an interesting question and I am interested in what you are hearing in your office. My understanding is that as an "Agent" of the insurance company you cannot be a fiduciary. Those two roles are mutually exclusive. You have a duty as an "Agent" to the company. You are empowered to bind coverage on the part of the company with the applicant. That power comes with the obligation to protect the interests of the company. You can't put anyone's interest before the agency. Not yours, not the clients, not your Momma.
This has fuckall to do with your ability or interest in taking care of your clients. You may be right on the line of putting your client first, but the company, by virtue of the Producer contract you signed, has first dibs on your attention. That's how I understand it. I was only a career agent for 4 or 5 years, so I could be wrong. Interested in your thoughts. Bagua
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https://www.kitces.com/blog/the-4-different-types-of-financial-advisor-fiduciaries/
"I explore four different types of financial advisor fiduciaries, including: RIAs that are SEC fiduciaries, DoL fiduciaries serving retirement investors, CFP fiduciaries providing financial planning, and voluntary fiduciaries who decide to step up to honor private/third-party fiduciary standards." However one holds themselves out to the public, is the standard they will be held accountable for their recommendations. When you're selling insurance (life, DI, fixed annuity, LTC, etc.), as soon as you are taking an application, you are working in the interests of the insurance company to complete a proper application. Until you are taking an application, you're working for your client to determine an appropriate action/level of protection, etc. If you sell anything to do with qualified retirement plans including IRAs, then you are a fiduciary. Can an insurance agent be a 100% fiduciary all the time? No. (Unless you have set up legal engagement agreements, have a life & disability analyst license in your state, and accept a fee for service.) Can an RIA/IAR for the SEC be a 100% fiduciary all the time? Yes. Can an RIA/IAR for the SEC who has an outside business activity be a 100% fiduciary all the time? I would surmise 'no' because it is an outside business activity with its own rules and regulations. However, you would need to disclose that a conflict of interest exists and that you receive a commission.
Edited by D.H.K. - Jun/08/2017 at 3:37pm |
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socalfa
Greenhorns Joined: Jun/08/2017 Status: Offline Points: 35 |
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No offense taken.... In terms of the recommendations made, anything that remotely resembles an asset or investment gets passed through compliance to verify "best interest of the client" (only exception to this being term life, as far as I know). This includes products that would not be considered investments but are a savings vehicle (e.g. permanent indexed or whole life policies). In theory, I could never sell a single insurance product and make my validation. Comp from A Shares or advisory accounts all goes towards my benefits-eligible compensation. In practice, doing insurance/annuity makes up a large part of my BOB because (a) protecting against the risk of dying too soon or living too long is an important part of many clients' financial plan, and (b) life insurance pays well. As a mild jab at the "RIA fiduciary purists" -- if your only compensation comes from asset management fees, does that not give an incentive to ignore or downplay necessary life insurance coverage, because every dollar into a premium is a dollar not going into a wrap account? In terms of making a comprehensive financial plan, that seems like a potential conflict of interest. |
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PEACH_cm
Senior Member Joined: Jan/16/2013 Status: Offline Points: 7184 |
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RipRock
Senior Member Joined: Oct/29/2013 Status: Offline Points: 1807 |
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Exact response I was expecting from you. 1. You pass everything off to the "company" to decide YOUR clients best interest disguised as "compliance". 2. Insurance = Savings vehicle 3. Insurance is your lead in because everyone should have fear of something and you sell the answer. Listen, it's unfortunate that I singled you out - you are not alone, but I really think the fiduciary rule should have made a very exact distinction of who is a financial advisor and who represents a company or product as a sales person. |
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Moraen
Admin Group Resident Sage Joined: Mar/09/2010 Status: Offline Points: 30786 |
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There are parts of this that I could agree with. First, the AUM fees as a method of compensation do align the incentive with doing as little as possible to generate those fees. However, RIAs have to consider a few other incentives as well. Being a small company competing against big company's, they have to differentiate themselves. Second, RIAs have flexibility and can indeed be paid on life insurance. They can charge for a life insurance "consultation" on an hourly or fixed fee basis. Third, there is a high likelihood that one of your clients would die before their time, resulting in a life insurance payout, which could increase AUM. The small cost to the client (and temporary loss of AUM growth due to increased deposits), can result in a large windfall for the spouse of a client and/or children, and much larger AUM fees. For example, I just had a client die. She had about $2MM. I knew she had cancer, and was working with her daughters and her (one is hot, the other is not), and estate attorney. When she passed, her life insurance paid out an additional $1 million. If I have no more clients die, this particular clients premiums paid for the potential loss in income. Now, that is the shitty, greedy advisor talking. However, it was also the right thing to do for her kids for various reasons. |
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I come in peace. I didn’t bring artillery. But I’m pleading with you, with tears in my eyes: If you fuck with me, I’ll kill you all. - General James Mattis
Fiduciary as Fuck - iMo |
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luvindy
Moderator Joined: May/17/2010 Status: Offline Points: 25767 |
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Do you have insurance sales requirements to keep your job? |
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8/31/12,Sportsfreak:
"If Barak wins this election, or appears to be clearly winning, we are all fucked. Market will tank big time." Dow 13,090 S&P 1406 5/23/13 UC:Dow 20k before 20% crrectn Dow 15, |
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socalfa
Greenhorns Joined: Jun/08/2017 Status: Offline Points: 35 |
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I could do entirely brokerage/IAR work and keep my job. Sales requirements are not product-specific.
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