It has been three years since the inception of FINRA Notice to Members 05-50 shook up the FIA world with a mandate for broker-dealers to supervise the sale of fixed index annuities. Since then, B/Ds have scrambled to accommodate existing variable securities producers who generate a fair amount of FIA business.
Most B/Ds are concerned that if they don’t accommodate these reps, they will take their fixed business to another FIA-friendly B/D. Many B/Ds also look at the FIA business as nothing more than a nuisance, additional liability and ongoing noise in the continuing clash between traditional securities and insurance.
In the words of the infamous Rodney King, “Can’t we all just get along?”
At the recent Income Summit, two advisors with identical client profiles came up with diametrically opposed case designs. One was insurance-weighted with the usual blend of annuities, life and long-term care insurance. The other proposal included dividend-paying blue chips, structured product and laddered bond funds. This divergence of professional opinion helps illustrate the situation. Because fixed products haven’t been part of the stable of revenues at most B/Ds, having a profit center that includes FIAs or other fixed insurance products has been an afterthought.