FA - Investment Firm Vs. Insurance Co
After the various posts yesterday on New York Life and from some previous discussions from both new and established members perhaps a general discussion on the differences and similarities.
In general the Investment Firms FAs sole focus is to gather Assets , despite being lisenced to sell Insurance Products they generally do not pursue this part of the financial planning process. The reality is that the firms do not encourage the sale of Insurance product/s as they emphasize Asset Gathering and the FAs compensation is based on that reality. The sale of Insurance Product/s in fact is impacted on their Grid.
The Insurance Company FA is actively selling a wide range of Financial Products and just part of the product selection is Mutual Funds and other investment products. Their product shelf by definition is more extensive.
To compensation , I would think again in general terms you would find that successful FAs in the above firms would be compensated at the same levels. One major Canadian Insurance Firm ( Sun Life ) states that Average Income for FA in 2007 was 116,000.00. I find that to be an accurate number ( plus/minus ). Typically the Insurance Firm first three year FA compensation:
Year 1 - 40-50K
Year 2 - 50-65K
Year 3 - 75-90K
Not suggesting that either is better or worse but rather to the discussion yesterday just a different approach to the Financial Planning Process.
I believe that the biggest difference is that with an insurance company almost everyone is a qualified prospect. My practice has been built on people who are not great wirehouse prospects.
I would venture to guess that at least 75% of my business is from people who were not wirehouse prospects when we first started working together. People like young CPA's and young attorneys, or business owners with little in the way of assets other than their business.
Anon.....you have the point in the discussion. I think that again in a general sense the FA from the Insurance Company has the opportunity to discuss a much broader product range with clients and prospective clients. The Insurance Company FA will take the insurance business , mortgage business , medical/health business , term deposits and more than happy to add the monthly PAC RSP ( Registered Retirement Plan ) MF business.