Agents, beware of IMOs offering RIA servicesArticle added by Roccy DeFrancesco on April 22, 2014
Roccy Defrancesco

Roccy DeFrancesco


Joined: May 24, 2006

I’m on record as stating that I think every insurance agent should obtain their Series 65 license. As such, you might think the title of this article is a bit odd. After you read the following, you will better understand.

Why should an insurance agent obtain a Series 65 license?

All you have to do is read my past articles on the topic which you can do by clicking on the following links: If you are an insurance agent and have read the above-listed articles, the only conclusion you can come to is that there are multiple reasons why it’s a good decision to obtain a Series 65 license.

Opportunity knocks and IMOs step in

Anytime there is money to be made, independent marketing organizations typically will smell the money and will act to get a piece of the pie. It’s not that I blame them; it’s that IMOs in general do such a poor job with providing the “best” options to insurance agents who truly want to provide the best advice to their clients.

Simple comparison

One of the largest IMOs in the industry has been ahead of the curve a bit when it comes to recruiting insurance agents to their RIA platform. Let’s see how that platform stacks up against another platform. I used two of the tactically managed strategies that the RIA promoted by the IMO uses and compared them to other tactically managed strategies by another RIA.

The back testing is from 2002 to 2013.

Strategy #1Strategy #2 Favorite #1Favorite #2
Net Return Since 2002

Which investment strategies do you think your clients would like better? It’s a no brainer, right?
But when the IMO you are using for your insurance business tells you they have an RIA you can use and make good money in the process, what do you do?

Do you spend days, weeks or months looking for the best RIA platform to work with, or do you just sign up as an independent advisory representative (IAR) with the IMO’s RIA because it’s easy and because you don’t know any better? Unfortunately, most in our industry do not take the time to do real due diligence and the by-product of that is inferior advice to clients (which can cost them dearly).

Be careful

I’m here to tell you to be very careful when you pick an RIA to work with. Most insurance agents will become IARs under an RIA (it’s easier and cheaper). When you get your 65 license and become an IRA or an RIA you have a fiduciary duty to your clients when it comes to the advice you give.

Picking an RIA to work with that you know has significantly underperformed other RIA platforms you could work with is not my idea of fulfilling your fiduciary duty to your clients. But again, I’ll let readers make that determination for themselves.

I hope this article will motivate insurance agents who are not licensed to consider getting a 65 license. I hope those who already have one, especially those working with an RIA offered by or through an IMO, will think critically about whether you are using the best platform for your clients.

Getting a 65 license will help you protect against regulations and generate significant additional revenue, but because of the added fiduciary duty, I strongly recommend you seek out a platform you think is the best for your clients.
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