Regulation: Broker Dealer vs RIA
For insurance Agents selling life insurance, annuities and other financial products (non-casualty and property), they should be preparing to come under greater regulations. This regulation may be similar to the regulations which Registered Investment Advisers (RIAs) currently are subjected.
Register Investment Advisers who typically charge a fee for their investment advise are deemed fiduciary and must act in the capacity of placing their clients’ interest first. RIAs are register with the Security and Exchange commission (SEC) or with individual states.
Broker-Dealers are register with each state which they sell their products. They also register with the Financial Regulatory Authority, a self regulatory organization. Broker dealers are not regulated the same as investor advisers and have different standards.
Most insurance agencies who sell financial products understand the compliance regulations and bidding by them consume time. There is a new regulation for broker dealers - suitability requirements which are being embraced by the state insurance departments and the National Association of Securities Dealers (NASD). The National Association of Insurance Commissioners (NAIC) with the NASD have adopted the Suitability in Annuity Transaction Regulation. It was drafted to insure the broker dealers as RIAs, should only recommend products suitable for their clients.
It is now more important than ever to document the clients specific questions as how many years does he/she not require their money, tax status and the level of risk aversion.
It is important for customers to have a fair expectation of the service the broker dealer is providing. Is the agent/broker providing full financial planning or a limited service of simple family needs analysis (FNA). FNA focuses on income replacement in the event of premature death.
Author: your-insurance-site.info
Sponsor: your-insurance site.info
Source-IIA
