Insurance Licensing and Other State Regulations Considered Redundant, Burdensome
By Cathy Weatherford
Insured Retirement Institute (IRI)
Washington, D.C. – March 20, 2013 – New research findings released by the Insured Retirement Institute (IRI) shows that maintaining state insurance licenses across multiple jurisdictions is a regulatory obstacle that may impede the sale of retirement income products. Considering that most financial advisors, 83 percent, are licensed in multiple states, the redundant processes are viewed as a burden to financial advisors.
The IRI study, which is part of a research initiative to identify regulatory barriers that impede broker-dealers’ ability and financial advisors’ willingness to sell lifetime income products, found that 80 percent of broker-dealers said state regulations have a negative effect on the ease of conducting annuity sales. In fact, while 46 percent of broker-dealers say they would like to sell more annuities, 83 percent of broker-dealers and 76 percent of financial advisors believe it takes considerably more time to sell annuities compared to other investments.
According to IRI’s findings, the average financial advisor spends nearly 22 hours per year to complete continuing education requirements and licensing renewals to sell annuities—compared to just under 16 hours to complete continuing education requirements and licensing renewals to sell securities. Additionally, seven in 10 broker-dealers believe that state insurance licensing can be ambiguous or poorly defined, and eight in 10 broker-dealers believe that state insurance regulations are duplicative.
As a first step toward easing these restrictions, IRI supports establishing a one-stop national licensing clearinghouse for financial professionals operating in multiple states. The National Association of Registered Agents and Brokers Reform Act (NARAB II), which would establish such a clearinghouse, was reintroduced last week in both chambers of Congress.
“Time spent on redundant licensing requirements is time not spent servicing clients and focusing on their needs,” IRI President and CEO Cathy Weatherford. “The time has come to advance NARAB II. This bipartisan and common-sense legislation promotes the efficient and cost-effective licensing of thousands of financial advisors across the country, while maintaining important consumer protections. We urge Congress to support and advance this legislation to establish a streamlined licensing process, and at the same time, retain states’ authority to regulate the marketplace.”
The Senate Banking Committee’s Subcommittee on Securities, Insurance and Investment held a hearing on NARAB II legislation on March 19, 2013. To view testimony from IRI President and CEO Cathy Weatherford, click here.
To view findings from IRI’s regulatory environment study, click here.
About the Insured Retirement Institute:
The Insured Retirement Institute (IRI) is a not-for-profit organization that for twenty years has been a mainstay of service, commitment and collaboration within the insured retirement industry. Today, IRI is considered to be the authoritative source of all things pertaining to annuities, insured retirement strategies and retirement planning. IRI proudly leads a national consumer education coalition of nearly twenty organizations and is the only association that represents the entire supply chain of insured retirement strategies: Our members are the major insurers, asset managers, broker-dealers/distributors, and 150,000 financial professionals. IRI exists to vigorously promote consumer confidence in the value and viability of insured retirement strategies, bringing together the interests of the industry, financial advisors and consumers under one umbrella.
IRI’s mission is to: encourage industry adherence to highest ethical principles; promote better understanding of the insured retirement value proposition; develop and promote best practice standards to improve value delivery; and advocate before public policy makers on critical issues affecting insured retirement strategies and the consumers that rely on their guarantees. Visit www.IRIonline.org today to experience the vast resources of the Insured Retirement Institute for yourself.