Be An Insurance Specialist To RIAs

We receive multiple inquiries from our registered BGAs about how a representative can work with a fee-only investment advisor for the sale of variable life or annuities. The RIA business is booming. As of April, 2018, the U.S. Securities and Exchange Commission (SEC) reported just over 12,500 RIA firms employing over 800,000 non-clerical individuals. That compares to just over 3,700 broker/dealers employing fewer than 630,000 registered representatives. According to a TD Ameritrade survey, RIAs recorded a 14.3 percent growth in revenue on average for 2018 and grew their client base by 7.5 percent. Their clients often have insurance needs, either for protection, estate planning or accumulation purposes. Many of these firms are fee-only, meaning they do not accept commission-based compensation. With the new SEC guidance and CFP Code of Ethics, there is more clarification on how RIAs can get paid and how they need to treat clients.

How can you leverage your insurance expertise with these RIAs and make it a win-win for you and the RIA?

When the RIA is “fee based” and has insurance-licensed, FINRA-registered members, it is easy. You can work with their client and the advisor, and they can earn a commission as an agent on the application. When the other professional is only insurance licensed there isn’t a way to pay VUL commissions to them, but you can compensate by increasing the commission split on fixed business you may do with them in the future.

However, what happens if the RIA is “fee-only” and/or a CFP working under the new code of ethics and standards of conduct?

In the beginning of the CFP certification it was supposed that the CFP acted as the coordinating financial professional and worked with the other financial professionals to assure a coordinated financial planning process. This meant that the RIA/CFP worked with the accountant, attorney and insurance agents to assure that all the planning parts worked together to fulfill the client’s financial planning needs. In the 1970s and ‘80s, this worked fine, but by the 1990s many of these other financial professionals were moving into the original advisor’s space. Attorneys and accountants were selling investment and insurance products, insurance agents became “financial advisors,” and all the professionals were competing in each other’s space. Because of this competition for the RIA’s clients, they quit referring them to their competitors. This is where the opportunity lies for a true insurance professional. You can work with these RIAs to help complete their client’s insurance planning process. Want to become the insurance solution for the client relationship for the RIA without competing for the relationship? If you will act as an insurance specialist to RIAs, there are ways to work successfully under the new and revised best-interest guidelines that fee-only RIAs must adhere to going forward.

There are only a handful of BGAs that have successfully marketed to and worked with RIAs in their respective geographical areas. The RIA marketplace will continue to grow, and their clients will continue to need insurance-based solutions. As an example, we had a BGA successfully place three large VUL cases with clients of an RIA this year alone. The BGA had marketed to this RIA, and several others, over the past 18 months. As with most insurance sales, the first engagement occurs when the client requests life insurance. In this scenario, the RIA asked the BGA to come in and explain how they could fill this need and potentially be compensated. Armed with the available arrangement options from The Leaders Group, they were able to place the first case, and two others were placed with another advisor of the firm, for a combined target premium of nearly seven figures.

The RIA marketplace will continue to grow, and if you aren’t working in this area of life insurance distribution you could be missing the largest opportunity of the next decade. Just like the wirehouse market of the 1990s and 2000s, there are not many BGAs working in this market yet. In 10 years, however, there may not be many new relationships available. As always, there are ways to help RIAs stay in compliance and still generate more recurring revenue from additional AUM through life insurance, and we will continue to research all the best available avenues to approach these markets.

Dave Wickersham is the founder and CEO of The Leaders Group, the largest distributor broker/dealer in the world for variable life insurance. In the 20 years that the firm has been in business, it has grown into the premier broker/dealer for BGAs, with more than 130 agencies calling it home. He is also a founder of The Life Insurance Center, an application fulfillment center built for BGAs.

Wickersham can be reached by telephone at 303-797-9080. Email: dave@

Jane Riley is the chief compliance officer for The Leaders Group and TLG Advisors and joined the company in 1998.

She holds numerous FINRA designations as well as the Certified Securities Compliance Professional designation. Currently, she is chairman of the National Society of Compliance Professionals and is chair and founding member of the Denver Compliance Roundtable.

Riley can be reached by telephone at 303-797-9080 x 101. Email: