Advisors, rather than fight it, should adapt and find a new way to work within the new regulations. Under these new regulations, the landscape for advisors will change. The most major change is the IMO’s and FMO’s that distribute annuities will need to rework themselves. Under one of the rulings, the relationships between client and financial institutions are tantamount, but there is a fiduciary responsibility that will be set up. Since most of these IMO’s and FMO’s serve independent advisors, the relationship for annuity sales under qualified plans, will be between the client and IMO and FMO. However, under the law, IMO’s and FMO’s are not considered financial institution and thus would rely on insurance companies to stand up and take the responsibility. However, insurance companies will not want to take this responsibility unless the advisor works for them directly. Thus, how independents get their products might change and companies might be changing their distribution. For a lot of companies, it will be too costly to have a direct channel with wholesalers, or to hire direct advisors, thus there might be a brain drain for information without a sales distribution. Some companies might limit or cancel their products for annuities. Other large distributors are being eased out of the business by companies and independents because the value add is not there, the same products keep coming up and thus they are not getting an expert sale nor are they getting choices, so there might be a need to get more information, expert insurance salespeople, and help independents.
Independents, will have a harder time in 2017 getting their information and their products as of right now. Companies with a strong distribution force will be able to capitalize, even though they will only have one product they will be experts and independents will need it. This is only one ruling, but the SEC is considering another ruling similar that will be even more stringent. Thus there will be some major changes. However, this does not mean the end of things. Having experts, that are consultants for advisors, that know all the products and companies, even if they represent one major company but have access to other companies these consultants will be key to the independent strategy.
How you adapt will be up to you, but having a strategy will be important and an expert in your corner, tantamount to your practices success in 2017.