Placing VLs & VAs Through BGAs: What You Need To Know
Many registered representatives are not aware of what it takes to place variable life insurance and variable annuities through an independent brokerage general agent.
Some believe the process entails: selling away, becoming involved in dual registration, or moving from ones present broker-dealer.
All those presumptions are incorrect. Done properly, dealing with variable brokerage is as non-complicated as brokering non-variable cases.
What, in particular, can you, the rep, expect in such a relationship? Lets review the four key areas with which the variable brokerage general agent deals when doing business with you. They are: suitability, case flow, contracting, and compensation.
Suitability. You, the registered rep, must satisfy the suitability requirements of the sale set forth by your broker-dealer. Your broker-dealer remains responsible for compliance and supervision of you as a rep, even when the sale is being done on a brokerage basis.
Given that, the knowledgeable BGA never offers suitability advice to a registered rep of another broker-dealer. Instead, the BGA refers reps to their own broker-dealers for answers to suitability questions that arise regarding the sale or its documentation.
Such an arrangement is simple for all parties to follow, and allows for efficient processing of the case.
Case flow. This typically takes one of two routes, but both of them are also quite simple to follow. The route chosen depends on the standard operating procedure for variable brokerage cases set out by your own broker-dealer.
The most typical case flow follows exactly the same course as occurs in brokering non-variable cases. That is, the rep submits the case directly to the BGA for processing, while at the same time furnishing suitability requirements to the reps own broker-dealer.
In the second scenario, the registered rep first sends the case, along with suitability requirements, to the broker-dealer. In turn, the broker-dealer sends the case to the BGA for processing.
In either scenario, suitability of the sale is between the rep and his or her broker-dealer.