States are Forcing Insurance Agents to Become Securities Licensed
All advisors are familiar with the SEC trying to regulate Fixed Indexed Annuities (FIAs) when it introduced 151A. 151A freaked out insurance-only licensed advisors who thought they might lose the ability sell FIAs. When 151A failed, most advisors forgot about it and went back to business as usual.
Have you ever heard the term “source of funds” (SOF)? If not, you should. State regulators are trying to, in a back-handed way, do what 151A could not. They are trying to force insurance-only advisors to obtain a securities license.
What is SOF?—it is simply asking where did the money come from to fund a fixed life or annuity contract (what is the source of funds?). If the money to fund a fixed insurance product came from the liquidation of stocks, mutual funds, etc., you may have a real problem if you don’t have a securities license. This includes money in IRAs.
Violations of the SOF rule in Arkansas will subject advisors to a fine up to $20,000 per violation.
Don’t believe it?—all you need to do is read AR Insurance Department Bulletin No. 14-2009 and IA Insurance Department Bulletin 11-4. To READ THESE BULLETINS with your own eyes, please click here.
What does the future hold?—it is my belief that over time every state department of insurance will follow suit and will issue the same type of bulletins. If you live in AR or IA, you already have this headache to deal with. If not, you have a window of time to get ready for the inevitable.
How do you get ready for the inevitable?
Simple—become an IAR under an RIA that specializes in working with insurance agents. To learn more about the one we recommend and on that has proven over and over that it can help advisors gather millions of dollars in AUM and double their fixed business along the way, please click here.