How to be an Insurance Specialist to RIA firms

By Jane Riley | Chief Compliance Officer

 

We receive questions every week about how a representative can work with a fee-only investment adviser for the sale of variable life or annuities.  The RIA business is booming, and as of April 2018, the U.S. Securities and Exchange Commission (SEC) reported just over 12,500 RIA firms employing over 800,000 non-clerical individuals. That compares to just over 3,700 broker-dealers employing just under 630,000 registered representatives.  Many of these firms are fee-only, meaning they do not accept commission based compensation, and very often, their clients have insurance needs either for protection, estate planning or accumulation purposes.

How can you leverage your insurance expertise with these RIAs and make it a win-win for you and the other advisor?

When the other professional is licensed and registered it is easy. We can pay commissions to their B/D or have them join The Leaders Group and split the commission at an agreed upon rate.  When other the other professional is only insurance licensed you can increase the commission split on fixed business you may do with them.

When other professional is not FINRA registered or insurance licensed there are several steps in the process:

  • You meet with client and make appropriate recommendations. You are the writing agent (or it may be the GA).
  • Agreement between the RIA and The Leaders Group for Insurance Portfolio Management for up to 10 years or as long as the customer remains client of RIA, whichever is shorter.
  • The Leaders Group receives 30%- 50% of Gross Dealer Concession and places it in a sinking fund.
  • The Leaders Group pays agreed amount quarterly, or as determined periodically, in arrears for services rendered by the RIA.

Payments are not commissions and cannot be based upon transaction amount – usually based upon target premium amount.  

If you would like additional information on or have RIAs that are ready to go, please contact Chaz, Micah, Dave, Sean or I for more information.