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DOL Proof open for businessWill the DOL fiduciary rule be stopped before its April 10, 2017 deadline? It’s a question with tremendous implications for insurance-only advisors, particularly those who struggle with the question of having to get a Series 65 license – or any additional FINRA or NARAA licenses, for that matter. With Republican control of Congress and the White House coming in January, many are hedging their bets over a number of possible outcomes:

• The Republican House and Senate will act swiftly to reintroduce and pass legislation repealing the rule,
• The incoming Labor Secretary will stop the rule,
• Congress will stopgap the rule via its budgetary process,
• The rule will be delayed past the April 10 deadline (some say by as much as two years), or
• With his aggressive 100-day action plan, President-elect Trump will focus on other policy priorities with Congress.

For insurance-licensed agents, the future may seem like a crossroads. Will the rule be stopped before it takes hold on April 10, 2017? Or will it still go into force, thereby requiring financial professionals of all stripes to be DOL compliance-ready?


Even with uncertainty on the horizon, now isn’t a time for a wait-and-see approach. Why? Because change will come inevitably, whether through the DOL rule or something else in the future.

These new regulations are more seismic than any others we have dealt with in the past. As a result, our industry has been making sweeping, unprecedented changes to be compliance-ready. It isn’t a situation we can just walk away from or go about “business as usual,” even if the new investment advice regulations are curtailed.

The Series 65 Question
If you are thinking about whether to leave the industry or to make drastic business changes – like getting a Series 65 license – you aren’t alone. A recent study by Fidelity Institutional shows these are concerns for many annuity and life-selling professionals:

• 10% of advisors say the new regulations may prompt them to leave the business
• 18% of advisors report the rule makes them rethink their career
• 67% of advisors are re-evaluating the types of clients they work with

A big DOL question is whether you need to get a Series 65 license for fixed index annuity sales, which fall under the Best Interest Contract Exemption.

The short answer is no. In fact, so long as you offer limited advice with general information on diversification, various risks, different investment markets, and historical economic trends, you are covered. Your state insurance license will entitle you to engage in these general conversations and to discuss guaranteed insurance products. That includes fixed index annuities (of course, any insurance product recommendation must align with the client’s needs, risk tolerance, and overall profile). As always, variable annuity sales require securities licensure.

Then why are so many recruiters saying insurance-licensed professionals should get a Series 65 license?

Are Insurance Licensed-Only Advisors Going Extinct?
The bottom-line? Many recruiters push the Series 65 license route for self-serving purposes. It’s about meeting quotas, filling the ranks, and strengthening their company, albeit at your expense. So, what does this mean for insurance-only advisors? Well, much of the hoopla is tied to fixed index annuities and financial institution requirements laid out by the Department of Labor.

Under the rule, fixed index annuity sales require a Best Interest Contract (BIC), or a signed contract between the annuity buyer and a “financial institution.” This contract confirms that the annuity recommendation isn’t imprudent for that buyer, and that it doesn’t involve improper excess compensation. The Department of Labor defines these organization types as financial institutions:

• Banks
• Broker-dealers
• Registered investment advisors
• Insurance companies

The Department of Labor has indicated it may grant IMOs an “exemption” to be financial institutions, but that hasn’t materialized yet. So, insurance-licensed professionals need a financial institution for signing off on those contracts. But here’s where so many people get it wrong.

Separating Facts from the Smokescreens
Consider these pitches to get your Series 65 license, or to go the securities route:

• You must align with an RIA or a BD, because insurance companies haven’t stepped up and volunteered to be a financial institution.
• If you affiliate with an RIA, you have to get your securities license, and if you affiliate with a BD, you must become a registered representative. Either way, you have to step into the world of securities, whether it’s in line with your business goals or for pragmatic reasons.

Coming down to brass tacks, you don’t have to affiliate with a securities-oriented firm for fixed index annuities – or for that matter, sales of other fixed, guaranteed insurance products. If you like to stay on the insurance-only side, then get the license you need to serve the clients you choose with the insurance products you offer. All of this is from our first-hand discussions with insurance carriers, leading consumer advocacy groups and trade organizations, and other third-parties that are in active conversations with the Department of Labor.

The problem is when insurance-only advisors affiliate with a BD or an RIA, they are tied to their product recommendations – and their insurance carrier relationships. The net result is reduced independence. To be clear, those product recommendations could include recommendations for securities options like variable annuities, which is why some licensed agents get out of the securities business, to begin with. Having seen the effects of market downturns on client monies, their focus is now on preservation of capital and income.

Not only that, other people leave the securities world because of compliance headaches. They don’t wish to bother with those elements anymore. It doesn’t make sense to deal with all the nuances of securities dealings or licensures if that is outside your business purview.

Now, let’s address best interest recommendations. To be clear, if you want to stay an insurance-only advisor, you don’t have to get your Series 65 license. Nor do you have to get any other FINRA or NASAA licenses. Per suitability and incoming fiduciary standards, work with clients to determine their personalized variables – including needs, objectives, risk tolerance, time horizon, and liquidity requirements – and find annuity or life strategies that align well with those conditions.

Again, so long as your advice is generalized information on different investment markets, various risks, recent/historic economic data, and the like, your state insurance license covers general, informative conversations. Recommendations to move, or not move, qualified monies to an annuity do trigger the fiduciary standard, but that doesn’t require you to be Series 65 licensed. So, what do you need to do to be DOL-ready?

Be DOL-Ready, Partner with the Right Firm
You don’t have to turn to an RIA or a BD for financial institution requirements. Don’t settle for slashed commissions and a smaller product shelf. What if there was a way for you to be able to offer insurance-only recommendations and be completely DOL compliance-ready?

At Safe Money Resource, we offer:

• Existing financial institution relationships so you don’t have to change your practice focus or get your Series 65 license
• All the software, documentation, and recommendation processes you need to be completely DOL-ready
• First-tier training on “fiduciary matters”
• Cutting-edge solutions to deliver fiduciary-standard care to your clients and prospects
• Access to low-cost, premier E&O insurance with fiduciary coverage
• Personalized, comprehensive case illustrations for each client situation
• Complete, efficient marketing & advertising systems that are “DOL-proof”
• Comprehensive suite of educational, independent consumer guides and reports for fiduciary-standard education
• And everything else you need to be DOL-ready….

If you want to stay on the insurance-only side and help your clients preserve the safe money portion of their retirement capital – the money they can’t afford to lose – the fiduciary rule represents a new business opportunity. New pathways to form relationships with your clients built on impartial guidance, careful education, responsibility and trust.

Think about it:

• In a March 2016 survey, 77% of consumers supported requiring by law all financial advisors to act in their clients’ best interest when giving investment advice.
• 93% of those surveyed said it was important for financial advisors to be held to this standard.
• The survey findings mirror findings from a 2015 poll sponsored by the CFP Board of Standards. In that survey, when asked whether there should be regulations requiring advisors to adhere to a fiduciary standard, 75% of consumers said yes.
• Likewise, 70% said yes when asked whether financial advisors should be regulated to protect investors.

Now’s the time to get your practice in line with evolving public expectations and the DOL’s new regulations. To learn more about our exclusive DOL-compliance program for advisors and agents, call us at (800) 790-7791. There’s only so many spaces open, so contact us now before it’s too late!

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