By W. Andrew Unkefer
AnnuityNews.com
Recently, there has been a rash of organizations encouraging agents to become a registered investment advisor (RIA) or alternatively an investment advisor representative (IAR). In this third installment of a three-part series, we will explore the IAR option.
What about becoming an investment advisor representative (IAR) instead of an RIA?
With all the reporting requirements heaped upon the RIA, some marketing firms have suggested that you should become an IAR working under the supervision of their RIA. If you choose this route, you have just surrendered your independence. Your product choices will be reduced to what the RIA approves for you to offer. After all, the RIA is responsible for you now and will call the shots.
Marketing firms promoting this approach are using the IAR not as a way for you to be more compliant, they are using it as a way to recruit and hold you captive. And don’t forget, your liability as a fiduciary remains the same.
To make matters more challenging, the Securities Industry and Financial Markets Association (SIFMA) is suggesting to the SEC that a new regulatory organization be created to provide additional oversight on indexed annuities.
What’s the bottom line?
If you are considering becoming an RIA or an IAR so that you can continue to sell fixed annuities, indexed annuities or universal life insurance, your pursuit is for the wrong reason. If you believe the move to an RIA or IAR will insulate you from regulatory activity you couldn’t be more mistaken. You will be dramatically increasing the oversight and requirements upon your business practice.
What is the right direction for me?
If your goal is to sell fixed annuities, indexed annuities or universal life insurance, your focus should always be on adopting compliant business practices that are consistent with state insurance law and the requirements placed on you by the insurance carriers.
If you find during the process of selling insurance products that you are providing advice on the sale of a security position or if you are generating reports or doing research on securities positions and sharing these findings with your client, you could be accused of giving investment advice without the proper credentials. If you would like to provide these services to your clients then the RIA path may be right for you. However, the process of becoming an RIA is time-consuming, heavily regulated and can be expensive. Additionally, as an RIA, you will be held to the higher fiduciary duty for as long as you are a RIA. Perhaps a slight change in your client presentation and disclosure would suffice.
Choose your support wisely.
To accomplish this goal, you could work with an independent marketing organization (IMO) that is focused on harnessing winning sales concepts, ideas, illustrations and systems that are grounded on a compliant foundation. Your IMO should be helping you navigate this ever-changing landscape and providing you with a sales process you can easily follow that assures a measure of protection. Compliance-approved seminar systems, insurance company-approved direct mail pieces and highly effective illustration tools are no longer just a nice thing to have, they are required.
W. Andrew Unkefer is the president and CEO of Unkefer & Associates, Inc., a national annuity and life insurance marketing firm. The company’s goal is to be the No.1 resource for independent agents in their life and annuity business. He may be reached at 800.523.5851 or andy@unkefermail.com.
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