I'm a life insurance agent. It's taken me 33 years and 12 days to admit that. Ironically, there has never been a time in those 33 years and 12 days where I did not make a living selling life insurance products.
The Securities and Exchange Commission SEC regulates investment advisers and their investment adviser representatives. Insurance companies, insurance agencies and insurance producers are regulated by state authorities.
This means the adviser must hold the client's interest above its own in all matters. Make recommendations based on a reasonable inquiry into a client's investment objectives, financial situation, and other factors Always place client interests ahead of its own.
Since the financial crisis inthere has been great debate regarding the fiduciary standard and to which advisers it should apply. In JulyThe Dodd—Frank Wall Street Insurance advisor business plan and Consumer Protection Act mandated increased consumer protection measures, including enhanced disclosures and authorized the SEC to extend the fiduciary duty to include brokers rather than only advisers regulated by the Act.
As of Julythe SEC has yet to extend the fiduciary duty to all brokers and advisers regardless of their designation. However, in Aprilthe Department of Labor finalized a thousand-page rule holding all brokers, including independent brokers, working with retirement accounts IRAs, ks, etc.
The ruling includes one exemption for brokers, Best Interest Contract Exemption BICEwhich can be allowed if the broker enters into a contract with the plan participant and meets certain behavioral requirements. Opposition to the fiduciary standard maintains that the higher standard of fiduciary duty, vs the lower standard of suitability, would be too costly to implement and reduce choice for consumers.
Registered Investment Advisors are regulated by either the SEC or by the individual states, depending on the amount of assets under management. Most financial advisers carry licenses to sell life insurancesecuritiesor mutual fundsor some combination of all three.
Completion of the Canadian Securities Course CSC allows the sale of most types of securities, including stocks, bonds, and mutual funds. More advanced licensing is required for the sale of derivatives and commodities. Completion of a mutual funds course allows the adviser to sell mutual funds only, excluding certain types of very specialized funds and importantly, exchange-traded funds ETFs —although recently non-securities licensed financial advisers have gained access to ETFs through new mutual fund products.
The third possible license is the exempt securities license. In many, but not all, cases, licensing requires the support of a dealer or insurer. It is also mandatory for advisers to carry Errors and Omissions Insurance.
The term financial adviser can refer to the entire spectrum of advisers. In general, the industry in Canada is segmented into three channels of advisers: However, there is little regulatory control exercised over use of the term, and, as such, many insurance brokers, insurance agents, securities brokers, financial planners and others identify themselves as financial advisers.
Many financial advisers in Canada are also financial planners.A clear direction for investors seeking retirement income, life insurance, and investments, and focused financial solutions for businesses. Check out these tips on approaching small business owners for insurance agents & advisors..
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Elvine Skoretz is a financial advisor with over 30 years experience in retirement planning, wealth management, investments in RRSPs, mutual funds, life insurance and is located in Red Deer, Alberta.