Licensing Requirements Seen As Redundant, Costly

By Cyril Tuohy

InsuranceNewsNet

Maintaining state insurance licenses across multiple jurisdictions is a regulatory obstacle, a burden to financial advisors and may impede the sale of retirement income products, according to new research findings released by the Insured Retirement Institute (IRI).

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 make it more difficult and expensive to sell annuities.

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 because of the regulations, the IRI said.

The average financial advisor spends nearly 22 hours annually to complete education requirements and licensing renewals to sell annuities compared to less than 16 hours to fulfill licensing renewals to sell securities, according to IRI's findings,

In addition, 70 percent of broker-dealers believe that state insurance licensing can be ambiguous or poorly defined, and 80 percent believe that state insurance regulations are duplicative, the study also found.

As a step toward easing these restrictions, IRI supports establishing a 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 earlier this month in Congress.

"Time spent on redundant licensing requirements is time not spent servicing clients and focusing on their needs," IRI president and chief executive officer Cathy Weatherford said in a statement. "The time has come to advance NARAB II.”

NARAB II would enable financial professionals who have passed background checks in their home state to apply for NARAB membership, allowing them to sell products and services in other jurisdictions and bypass duplicative state licensing requirements.

The IRI is a not-for-profit organization that supports the interests of the insured retirement industry, which includes annuities, insured retirement strategies and retirement planning products sold by big insurers, asset managers, broker-dealers, and 150,000 financial professionals.

Cyril Tuohy is a writer living in Pennsylvania. He has covered the financial services industry for more than 15 years. He has also written about food, restaurants and travel. He can be reached at Cyril.tuohy@innfeedback.com.

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Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at cyril.tuohy@innfeedback.com.