"If insurance [only] the officers are advising people to sell mutual funds or leave 401 (k) s, they act as advisers investment. And in my state, being an investment adviser registered is not a crime. "- Joseph Borg, Alabama Securities Commissioner and Past President of the North American Securities Administrators Association said in the Wall Street Journal, August 8, 2007.
This quote is one of many warning shots that regulators have launched the only insurance agents who sell equity indexed annuities. With the adoption Rule 151A, one insurance agent may continue to sell equity indexed annuities until 2011. To continue to sell equity indexed pensions after 2011, they will be approved as a Registered Representative of a broker-dealer. Meanwhile, the only insurance agent must ensure they do not act as investment adviser registered with not discuss how to fund an equity indexed annuity.
The Investment Advisers Act of 1940, Section 202 (a) (11) defines an investment adviser as "any person who, for compensation, engages in business advisor, either directly or through publications or writings, as to the value of securities or as to whether to invest in, purchase or sale of securities, or who, for compensation and as part of a regular activity of issues or promulgates analysis or reports concerning securities … "
This definition can be decomposed into three components: 1) the board securities, 2) in the business of providing investment advice and 3) compensation. If an insurance agent that does all three elements, they could be considered as an unregistered investment adviser and disciplined by the Securities and Exchanges Securities Commission or a state department.
When you look at the first element, advice on values securities, the SEC and the courts have broadly interpreted this language. The advice may include securities in general, such as the exchange or subject specific titles. In fact, tell a customer when buying a stock, when to sell a security when moving to a different investment, how a security is assessed, and whether an investment in securities at all, everything has been considered a board under the definition investment advisor.
Of course, the notice must concern securities, which is broadly defined in Section 202 (a) (18), the Act advisers. Obviously, the definition of securities includes notes, bonds, equities (common and preferred) options and much more. These investments are generally found in the investment portfolio of a client. This means that the only insurance agent must be concerned that they give investment advice as defined above, when telling a customer to sell a mutual fund, stock, bond or other security to buy an indexed annuity equity. Unless the insurance agent tells a client that exchange, relocate or sell a product insurance fixed, they will most likely be considered investment advice as defined by law advisors.
An insurance agent that must carefully review and consider the advice they give to clients when considering their investments.
The second part of this article is to review the last two elements of the definition of investment adviser in the business of providing investment advice and compensation.
Annuity – Fixed Indexed Annuities
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