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Life Health > Life Insurance

The big picture on dual licenses

By David Port

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For financial planner Jillian C. Nel, earning dual licenses to offer both insurance and securities was originally little more than a career stepping stone, the means to escape from behind an administrative desk into a full-fledged advisory position at the large broker-dealer that employed her at the time.

“It was a matter of me needing the licenses to transition into the kind of role I wanted,” she explains.

Little did Nel imagine then just how meaningful being dual-licensed—she owns Series 7 and 66 securities licenses, as well as a general insurance lines license in Texas, along with a CFP designation—would become for her clients and her practice at Legacy Asset Management, a Houston firm she joined in 2011. “It has allowed me to be a much better steward and fiduciary for my clients,” she says.

That emphasis on stewardship has been a catalyst for generating the referrals on which Nel has relied in building a thriving book of business that now includes some 200 clients (mainly small business owners and mass affluent households) and about $50 million in assets under management.

From client service to competitive positioning to staying ahead of the compliance curve, the benefits of becoming dual-licensed are increasingly difficult to ignore, says Paul M. Mallett, senior vice president and chief operating officer at Postema Marketing, an insurance-focused independent marketing organization headquartered in Defiance, Ohio. “Strategically, if you’re planning to stay in the [insurance and financial advice] business, being dual-licensed is something you should be looking at.”

More advisors are doing exactly that, he says. “Today, the percentage [of dually licensed advisors with whom we work] is quite small. But I can tell you that anytime I do a webinar or post a blog on the subject, it generates a great amount of interest. A lot of people are considering it. And for good reason.”

Seeing a Bigger Picture

Perhaps the most compelling reason for being dually licensed, says Mallett, “is to expand your horizons and your offerings, so you’re really providing value to your clients. That’s what it’s all about.”

From a client perspective, that value often lies in an advisor’s ability to pull together and execute a comprehensive financial plan that involves products from both realms, says Jeffrey N. Tomaneng, a financial advisor with Lincoln Investment Planning in Waltham, Massachusetts, who holds Series 7, 24, 63 and 65 registrations along with life, health and variable insurance licenses, as well as a CFP designation. “When you have dual licenses, you are more likely to research and learn products. And when that happens, it makes it easier to coordinate a plan for a client, and to implement your recommendations.”

Armed with dual licenses, an advisor is better positioned to serve a broader range of clients and to address a wider spectrum of their needs, adds Hank N. Mulvihill, Jr., principal at Mulvihill Asset Management in Richardson, Texas, who owns a Series 65 securities license along with multiple state life and health insurance licenses, plus a CFP designation.  “It’s valuable from the consumer point of view because, sure, we can help them with investible assets, but that’s not where most people’s needs start. There’s a whole bunch of business just sitting there that people need help with before they become more affluent.”

Insurance know-how is a vital complement to investment management expertise, Nel, Tomaneng and Mulvihill concur. “I didn’t feel like I could be a good risk manager if I didn’t have both licenses,” says Nel. “I think you have to have a level of education and expertise with insurance, because the number one way to manage risk is with insurance.”

According to Tomaneng, dually licensed advisors are better equipped to emphasize and explain “concepts over products”—that is, to create solutions that coordinate securities with insurance to deliver growth while managing risk.

Advisors who lack an insurance license may find their hands are tied when it comes to implementing certain concepts and strategies. “You can’t do multi-generational planning and some kinds of trusts without insurance,” Mulvihill says. “There are situations where you can’t solve problems any other way” than with life insurance.

That dual expertise often proves invaluable in uncovering the very specific needs of individual clients, then tailoring strategies to address those needs, says Tomaneng. For example, having noted that a client has a strong defined benefit pension plan to provide income during retirement, he can steer the client away from purchasing an expensive annuity living benefit rider and deploy those assets elsewhere. “Having both licenses allows me to do a lot for my middle-market clients that I wouldn’t be able to do with only one kind of license.”

The ability to not only coordinate but execute both the securities and insurance facets of a plan, whether it’s a financial plan, an estate plan, or even a business succession plan, should not be discounted. “Having that ability allows you to get the client moving,” says Tomaneng, who manages about $33 million in assets across a practice that encompasses some 400 client households, many of which fall into the middle-market category. “Whether it’s an insurance or investment product, if we can help get it done sooner and get it done right, that’s good for the consumer and good for the advisor.”

It’s good for the advisor in that they can deliver the convenience of one-stop shopping to clients, rather than having to refer business to an outside financial or insurance professional who could conceivably wrest away more of the client’s business. “When you’re able to manage it all, there’s far less chance of another professional sliding in and taking a piece of business from you,” says Mallett. “The client has a relationship with one person whom they can trust for risk management, for managing assets—the whole picture.” 

There’s a proprietary mindset that comes with being dually licensed, adds Mulvihill, in which he feels, “I should be the one doing that work. Why should I cede business to someone else and expose myself to the risk that a client may take their business elsewhere? The client is going to find the answer, whether it’s securities- or insurance-based. I want to be the one who provides that answer.”

From the client perspective, there’s also an added level of comfort and trust knowing their advisor has the licenses and the accompanying expertise to handle both areas of need. “It really frees clients from worry and gives them a sense of ownership of their future,” says Nel. “They have a sense that I know what I’m talking about, which results in a wonderful level of trust and communication between us.” And that trust and communication, she notes, “leads to the free flow of referrals.”

Return on Investment

Becoming and remaining dually licensed does require an added level of commitment from the advisor in terms of cost, time and responsibility. On the insurance side, for example, there’s the work of getting licensed in the first place, perhaps in multiple states, then of relicensing while fulfilling continuing education requirements along the way.

Maintaining a securities license (or licenses) entails a similar commitment, although, notes Tomaneng, “with insurance licensing, the responsibility [for keeping up with requirements] is more on [the individual advisor], while on the securities side, you can lean more on your broker-dealer to help manage things.”

Maintaining dual licenses “is a challenge,” acknowledges Nel. “But it’s well worth it. It helps me to really raise the bar, to take planning to another level.”

Being both insurance and securities licensed “is a differentiator, which is always good in any kind of business,” observes Mallett. “Consumers are becoming more aware of things like fiduciary standards, and they’re more savvy about finding advisors they trust. For people like that, having an advisor who’s dually licensed matters.

“There’s a credibility piece to this, too,” he continues. “If you’re ‘just an insurance agent,’ you’re basically seen as a salesperson. But when you have a securities license too, that stigma disappears.”

Holding dual licenses also better positions an advisor to confront some of the new consumer-oriented protections looming on the regulatory horizon—developments such as broader fiduciary standards and source-of-funding requirements that state and federal regulatory agencies seem likely to adopt to improve transparency and remove potential advisor conflicts of interests. “The handwriting is on the wall,” says Mallett. “Having dual licenses really does put you in a much better position to address the coming regulatory changes.”

Given distinctions in the compensation associated with securities and insurance products, being dually licensed also provides a practice with diversified income streams. “Having compensation coming from different sources and streams is important,” says Tomaneng. “When you are dual-licensed, you create new revenue opportunities for yourself.”

The bottom line aside, perhaps the biggest benefit to being dually licensed for stewardship-minded advisors like Mulvihill, Tomaneng and Nel is an altruistic one: “It gives me more ways to help people,” says Tomaneng, “and for me, there’s gratification in that.”

“This business is about taking care of people and helping them reach their goals,” echoes Nel. “To do those things, expertise on both sides of the equation is a must.”  

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