Going independent and Insurance business

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Nov 18, 2009 12:05 pm

I am looking at leaving my current firm and going independent.  I understand the grid system for payouts on the investment side, but is it common practice to have your insurance commissions go through the investment grid as well?  On the investment side, $100 in commissions or fees would net me $65, but I would hate to see a $100 insurance commission go through a grid and net out $65 as well.  I would think the two businesses are different, and I would hope to keep 100% of my insurance commissions since the RIA would be getting an override of some sort.  Am I correct about this?

Is this common practice, or is one perspective firm out of line??

Thanks for any advise.

Nov 18, 2009 2:37 pm

If your securities production is good enough for your BD, many BDs will let you go directly to the agency of your choice and not asl for anything.  Some may require you to go through their partnership or own agency and pay you at the standard agent rate (sometimes better) without a haircut because they are receiving an additional piece from the agency's higher rate.  You should receive the standard agent rate and if you are a big producer more.  In summary, some bds will send it through the grid but there are plenty that don not.

Nov 18, 2009 3:15 pm

At a wirehouse, it is very common for all commissions, including insurance to go through the grid. Annuities do go through it.

And what do you mean independent? as in starting your own RIA? Working as an investment advisor for an RIA? Going to an independent broker dealer?

As your own RIA, you get all of the commissions. If you are working for an RIA, it is between you and your boss and how the insurance production is going to be split, is it going through the RIA's insurance license or your own? Who has the contract?

If you are working for an independent BD, hate to say it, but you are not independent. They can set the rules and force you to go through their own General Agent on the insurance side. But alas, it is between you and the BD.

And yes, the GA does get an override on the insurance, but it depends on the contract and how much they are passing on to you. Contact me if you want to know more.

Nov 26, 2009 1:22 pm

only variable goes through my Indy payout grid.  Any fixed type life/Annuity/DI/LTC is full payout.

Nov 26, 2009 9:58 pm
Amp2Indy2006:

only variable goes through my Indy payout grid. Any fixed type life/Annuity/DI/LTC is full payout.

Are you restricted to what GA you are going through? can you negotiate your own payouts with companies or have to go through an "approved" list?

most indy bd's i talked to, had you go through their approved GA, and guess what, those payouts were at street level or lower, whereas I can go through IMO's or direct to carriers and get 30% to 40% more.

When working at a wirehouse, I didnt think there was much difference between indy bd's and ria's... now that I went RIA, I could never imagine goign to an indy bd.... yes, you get comission based business, but if you can live without it while you build up your fees, it is tremendous.