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A suitability primer for insurance-only agents

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With SEC 151A in our rearview mirror, I’ve been talking with as many advisors and industry folks as possible to get a read on what pressing suitability issues insurance agents are facing today.

In this monthly column, I’ve mostly spoken with frontline advisors, but I wanted to take a different tact and get the scoop from a marketing organization perspective and had the opportunity to discuss this topic with Brian Lucius, chief marketing officer of Gradient Financial Group.

The following section is an excerpt of our conversation. For the purposes of this piece, we are discussing insurance-only agents. In a future column, look for a closer look inside the securities world.

SMA: In general, does the average advisor you talk to have a good grasp of treating clients and prospects ethically?

Lucius: We have found that the majority of our agents and advisors really do put their client’s interests first. We have a policy that any noticed pattern of unethical behavior will result in our disassociation with that particular advisor and reported to the proper regulators if need be. It sounds clich?, but we expect you to treat people as you would like to be treated yourself.

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SMA: When you meet with agents, what are some of the main questions that they have for you regarding suitability? How do you handle or resolve those questions?

Lucius: The most frequent questions we get on suitability are what are the basic guidelines to follow. Suitability can be somewhat subjective as it refers to an investment being “appropriate” for an individual scenario. Depending upon the products the agent or advisor is recommending may alter the scrutiny of the overall suitability. In this case, we’ll talk about insurance suitability.

SMA: Is there a key bit of advice you would give an advisor who is new to the business or is unsure of his or her role regarding suitability?

Lucius: We tell advisors that one very important piece to suitability is really getting to know your client. We provide our advisors with thorough fact finders to use in their client interviews, which allow us to see the whole financial picture. This allows us to help the advisor make suitable recommendations. If there was ever any question, we work with the insurance carriers on behalf of our advisors and their clients. Some carriers even offer a potential business form that the carrier will look at before the case is even submitted. This is just another step an advisor can take to make sure they have done their due diligence.