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Life Health > Life Insurance

The benefits of fee-based money management for IMOs

By Bruce Carlton

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Jesse James was asked, “Why do you rob banks?” His response was, “That is where the money is.”  While I am not suggesting that anyone rob a bank, I am suggesting that life, health and annuity independent market organizations have agents with investable assets that are easily accessible if the agents positions themselves correctly.

Previously, investment advisors had to be affiliated with a large money management firm with an active role in investment decisions and allocations. Then broker dealers (BDs) became popular with mutual funds and limited money management opportunities.

However, the BD platform has many challenges that make it difficult for advisors to justify. Some of the challenges include the fees the BD charges, plus compliance, oversight and stipulations of products that can or cannot be sold through the BD.

The good news is that when challenges are present opportunities appear to eliminate those challenges and create more opportunities. In recent years we have seen the Registered Investment Advisory (RIA) platform attract attention because it totally eliminates the challenges indicated above.

More importantly, the right RIA platform allows agents the opportunity to capture all of a client’s investable assets. Yes, you have to have the proper education (licensing) and training to be positioned as an investment advisor — and I will address that.

So, why should life, health and annuity IMOs explore the RIA platform? They should do so to:

Attract and retain agents

Help agents increase revenue, thereby increasing IMO revenue.

Sell more life and annuity business

Think about it: If, you can equip agents to be successful demonstrating to their prospects and clients the benefits of allowing the agent (through a professional money manager) to handle their investments, in addition to the life and annuity products, the agent has eliminated the competition AND picked up additional revenue in the process. While there are many alternatives available, including creating your own RIA, the best option could be to align yourself with an RIA firm that already has the platform, including educational, training, compliance and money management components.  You want this platform to be a value and benefit to working with your IMO.

You do not want to take your eye off the ball building your life and annuity business to build an RIA; you want this platform to be a compliment to your existing life and annuity platform.  Think of it as outsourcing to an RIA.

While compliance and money managers are an important part of the platform, it is critical that you choose and RIA partner that can also assist not just with the appropriate licensing but, with education and training. These two components are important if you and your advisors are going to be successful.

Finally, as an IMO that is considering the RIA platform, it is important that you find an RIA that shares your philosophies for growth and more importantly is not an IMO out recruiting agents and advisors as well. This is a conflict to your interest.

I am a big believer in providing value to customers. If you can help your customer grow their business and revenue, you will increase yours too. More importantly, the right RIA platform will help you increase your life and annuity sales and revenue at a time where every advantage should be explored in the marketplace.

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