August 5, 2010
I write on behalf of tens of thousands of insurance agents who are also Registered Representatives. Most national brokerage companies are not set up to work with clients of under a certain net worth (typically a million dollars) so that leaves the majority of people underserved. This is where we come in.
By law, we offer mutual funds (with some fund companies that have been in business for more than 70 years) variable Life insurance, variable annuities and 529 plans. That's it. No derivatives, no credit default swaps (whatever THEY are) no IPOs. We're Series 6 63 licensed so are not allowed to sell individual securities of any kind. We usually take care of IRAs and college savings (for as little as a $25 per month investment) and Life Insurance. We maintain insurance licenses (with their exams and continuing education requirements) as well as our Registered Rep requirements (exams, compliance meetings and office inspections.) We are ever-mindful of using only company-approved sales material, of client suitability and of all correspondence and compliance regulations.
Under this new legislation, we worry that we may be vulnerable to litigation because of market performance down the road.
Please don't take a heavy regulatory hand to advisors like me. Because we hold limited licenses, current FINRA, SEC, Broker Dealer, Fund Company and State Insurance regulations are entirely adequate for us. Our market is to lower net-worth people than national brokerages. And, representative like me have done nothing (nor can we) to cause the global repercussions these new regulations aim to stem.