Insurance agents who sell fixed and variable annuities often find themselves discussing a client’s investments in order to identify assets to fund new purchases. Conservative advisors often pursue dual registration in order to have a free rein during these discussions. More “adventurous” ones remain insurance-only, opening themselves up to competitor complaints and regulatory scrutiny.
In recent years, the states of Arkansas and Iowa have responded by drawing the lines between insurance and investments more finely so that insurance-only reps could stay out of hot water. Tennessee is the latest state to provide such guidance, issuing a bulletin this past May entitled “Licensing and/or Registration Requirements and Permitted Activities.”
According to the Tennessee document, insurance-licensed advisors may discuss a consumer’s risk tolerance, financial situation and needs, as well as general trends in the stock market, including market risks and recent or historic economic activity. But these discussions can only happen in the context of determining suitability of annuity purchases, policy loans, exchanges or replacement.