Many times over the years agents, primarily life and annuity agents have come to me and said they are worried they may be leaving business on the table and not maximizing potential benefits to their clients by not offering managed money solutions. Here is the situation, when an insurance agent specializes in selling life and annuity products he may not maintain a securities license and related affiliations. If he does not, and only offers fixed product like indexed annuities, MYGAs, universal life? his clients may look elsewhere for advice on stocks, mutual funds, bonds, and other investments or simply limit themselves to cash and CDs. Having a trusted advisor like their insurance agent unable to offer a full array of services limits their options and possibly reduces their returns and other objectives. Some clients may have a broker or other advisor they are not happy with. Studies show that even if a client does not like the performance of whoever is providing advice or managing their assets, they will often times be reluctant to make a change. This seems to be because after becoming unhappy with their selections in the past, the client has lost confidence their ability to find someone they believe can get the desired returns.
So how can an agent specializing in fixed products expand their service offering without adding licenses and hassles?
The solution is simple using a little know tool that has been in place for decades via a ?Solicitation Agreement.? The Investment Advisers Act of 1940 allows a portion of money management fees to be paid to an unlicensed ?solicitor? for facilitating relationships as long as certain criteria are met. Most significant among these are the need to disclose of the nature of the relationship to the end user and, the soliciting agent must have a clean background as far as major felonies and regulatory infractions.
In order to offer this solution to our agents, SilverSide has entered into an agreement with a long standing Registered Investment Advisor (RIA) firm. This firm has an excellent record of strong returns and exceptional risk management while managing various sizes of accounts through volatile market conditions. Under this arrangement, our agents get paid a portion of the management fee on a quarterly basis as an ongoing “solicitor fee” for as long as the referring agent?s client has their assets managed with our partner RIA. The agent will remain the key contact and can continue to advise their clients on fixed products, while other assets are managed through the advisory firm.
The recent ?DOL Rule? has been the subject of a lot of conversation and interpretation. Working hand in hand with a money manager can help an agent address many of the new challenges to an advisory practice, particularly ?source of funds? concerns pertaining to what assets should be allocated to what type of investments or products. Now more than ever, agents need to explore partnering opportunities they can use to earn on ongoing income, reduce exposure to new regulations, enhance their offering and increase their fixed business all without having to add licenses and hassles.
If you would like to learn more, call me at my office (480-998-1286) for details or to get in touch with our RIA partner to see if this is a good fit for you. – Steve Insalaco or visit our Money Management page today for more information.