To be or not to be…securities licensed?
Compliance. Every year more laws and regulations are being added to both the insurance and securities industries. Along with these new rules comes the increased pressure to comply with what some financial advisors consider to be an unfair and unreasonable sales environment.
In fact, some advisors are purposely terminating their securities licenses in order to operate under less scrutiny in the insurance market selling annuities, especially Equity Indexed Annuities (EIA’s). It’s no secret that these high commission and somewhat simple to sell “insurements” have created quite a stir in the financial services industry.
Although Fixed Annuities (including EIA’s) certainly have there place in the portfolios of many investors, there are some serious drawbacks in not having a securities license when giving investment advice. Please consider these three important points:
- Lack of objectivity when making investment recommendations;
- Crossing the line of giving investment advice without the proper license to do so;
- Illegally recommending the liquidation or transfer of securities without a securities license.
So many industry professionals are asking themselves the following questions:
- Can I truly service the needs of my various clients without a securities license?
- Is it ethical for me to let go of my securities license just so I can be ‘less regulated’?
- Are fixed or equity indexed annuities the best solution to help my client reach their investment objectives?
These are questions that all in the financial services industry would do well to ponder. Your conclusions may just lead you to:
A. Keep your securities license that you have worked very hard to obtain or
B. Work towards acquiring your securities license so you can better service the individual needs of your clients.
Kelly Shaw, a top producer and sales coach to many of the industry elite, said that “giving any investment advice without a securities license is a recipe for disaster” and that “any advisor who looks to be perceived as trustworthy, competent, and objective will embrace being held to a higher standard.”
Shaw says that since obtaining his securities license three years ago, he has found that having a more ‘full service’ fiduciary responsibility to his clients has been truly rewarding, both professionally and financially.
Indeed, annuities have their place in the financial services industry. In fact, they often may just be the best investment choice for many seniors. But if you want to be in a position to give unbiased and impartial advice to all your clients, you will need to submit to being regulated by both state and federal organizations that have put in place for the protection of consumers.
In addition, if you are an insurance agent that primarily sells annuities, we encourage you to work towards taking your securities exam. In fact, many industry insiders agree that soon the time will come when all who give investment advice (including annuities) will have follow the same set of rules.
So isn’t it time now to take the opportunity to get ahead of the curve? That is the question.
Published in: Senior Market Advisor Magazine - October, 2005 — SMA Website
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