While the SEC was not able to regulate certain fixed insurance products, the State Securities Commissions have not been deterred and are now trying to force insurance only licensed advisors to obtain a securities license to avoid state securities law violations when selling certain fixed products.
Be Proactive and Protect Your Livelihood!
Protection from regulation—most insurance agents (non-securities licensed advisors) make a living from selling life insurance to clients under 55 (usually cash value life) and annuities to clients over 55. For years there were no real regulatory nightmares that caused insurance agents grief. Then came 151A.
151A almost ruined the careers of thousands of agents—Rule 151A was passed by the SEC to regulate Fixed Indexed Annuities (FIAs) as securities. If 151A wasn’t struck down in the courts, every non-securities licensed insurance agent would have been forbidden from selling FIAs (which would have put 50% of the licensed agents out of business).
The regulatory threat is NOT over—when 151A was struck down, thousands of insurance agents let out a collective sigh of relief. While it’s true that 151A is dead for now, the State Securities Commissions (the bodies that regulate securities transactions in their states) are picking up where 151A left off.
Answer the following questions:
-If you tell a client to buy an FIA inside an IRA, do you need a securities license?
-If you tell a client to take money from a brokerage account to fund an Equity Indexed Universal Life Insurance (EIUL) policy, do you need a securities license?
-If you tell a client to move money from mutual funds to fund an SPIA (Single Premium Immediate Annuity), do you need a securities license?
Most advisors would say no to the above questions. But you know who is starting to say that may NOT be the right answer? The State Securities Commissions. Most advisors forget that the state commissions were fully behind 151A (click here to read a joint statement in support of 151A).
Source of Funds (SOF)
Have you ever heard of an insurance only licensed advisor getting in trouble for violating the SOF rule? It’s happening and it’s something you need to watch out for. All you need to do is read Arkansas Insurance Department Bulletin No. 14-2009, Iowa Insurance Department Bulletin 11-4, and Tennessee Insurance Department Bulletin from May, 2013. If these bulletins don’t motivate you to seriously consider obtaining a securities license, nothing will.
ALL agents eventually will need a securities license—it is our position that in the near future, EVERY insurance only licensed agent will need to obtain at least a Series 65 if they want to sell FIAs or EIULs and not run the risk of problems with the State Securities Commissions.
We believe that the State Securities Commissions will continue to pursue actions against non-securities licensed agents who are telling clients to move money from mutual funds, stocks, etc. into FIAs, EIULs, or other fixed instruments.
It is for this reason that from a compliance point of view we believe EVERY non-licensed agent should take the time in the very near future to protect his/her ability to make a living by obtaining a Series 65 and working the RIA Optima recommends (they offer a very unique/conservative AUM platform).
Sign up NOW to learn more—if you would like to know how you can become an IAR under the best AUM platform in the industry today (one that helps agents double their fixed product sales and pick up $2-$4 million in new AUM every year) please call Noe at 415-408-7763 or e-mail email@example.com for more information.