FEATURE
INDENTITY CRISIS
after which time he would be an insurance-only producer selling insurance under his life and health license. But Kolasa also was planning to obtain an insurance counselor license. (In Michigan, a licensed insurance counselor is allowed, for a fee, to counsel clients on the pros and cons of various insurance contracts and issues, and provide advice on benefits.) As a result, he would then identify himself as a “licensed life and health agent” and as a “licensed insurance counselor.” Heckert, the MDRT secretary, thinks the concern over what title to use is compliance-driven. But the terms agents actually use are marketing-driven. Agents tend to settle on titles that describe what they do within the scope of their licensure but in a way that differentiates or creates a marketing edge, he explained.
tection Bureau (CFPB) takes a different approach. Created by the Dodd-Frank financial reform law, this 2-year-old federal body released a report to Congress in mid-2013 charging that “financial advisors” are using senior designations that may confuse or mislead older consumers. The report says these “professionals” include “investment advisors, broker-dealers, accountants, insurance agents and financial planners, and other general financial professionals.” It’s easy to see, from the CFPB wording, that someone might draw the conclusion that insurance agents are a type
Incidentally, the FINRA discussion says financial planners could be brokers or investment advisors, insurance agents or practicing accountants, or individuals who have no financial credentials at all – a recognition, it would seem, of how interchangeable these terms are in the current environment. FINRA also tries to clarify some advisor terminology. For instance, it says an investment advisor is paid for providing clients with advice about securities and is registered with either the Securities and Exchange Commission or a state securities regulator. A financial advisor, meanwhile, “is a generic term that usually refers to a broker (or, to use the technical term, a registered representative).” FINRA cautions that the two types of advisors are not the same “and should not be confused.” But confusion will certainly arise. Just taking insurance as an example, four national bodies have discussed the insurance salesperson in four ways – as an insurance sales agent, an insurance producer, a financial advisor or professional, and an insurance agent.
Four national bodies Governmental have discussed the Terminology The state requirements defiinsurance salesperson in nitely are important, he said. But what if a producer four ways – as an insurance is licensed to sell insurance in multiple states? Is sales agent, an insurance the same title acceptable in each state? producer, a financial advisor Changing Times, A related question is: Are federal and state governmenChanging Titles or professional, and an tal bodies consistent on which Insurance producer nomenclaterms to use? ture is evolving, right along with insurance agent. The answer: It’s a mixed bag. the business environment, laws, There have been many governmental efforts to define and refine occupational titles. However, a review of various government reports, laws, codes, regulations, databases and similar documents shows the language does vary. At the national level, for instance, the U.S. Bureau of Labor Statistics refers to insurance producers as “insurance sales agents” and defines their duties as selling “life, property, casualty, health, automotive or other types of insurance.” It also says they “may refer clients to independent brokers, work as an independent broker or be employed by an insurance company.” Meanwhile, the National Insurance Producer Registry, a Kansas City database affiliate of NAIC, always uses the word insurance “producer.” No surprise there, considering the organization’s name. But the U.S. Consumer Financial Pro28
of financial advisor or professional. To learn more about the various advisors, the CFPB report sends the reader to a section of the Financial Industry Regulatory Authority (FINRA) website. That section includes a definition of insurance agent as “a salesperson who can help individuals and companies obtain life, health or property insurance policies and other insurance products.” This definition does get the agent’s sales role down correctly, although it makes no mention of the word “producer.” However, because the definition is linked to the CFPB discussion of financial advisors and professionals, some consumers may not grasp the distinction.
InsuranceNewsNet Magazine » January 2014
regulations and marketplace realities. But uniformity has not yet arrived. That means insurance agents, whether insurance-only or dual-licensed, have to do some homework on how to identify themselves. Independent agent Goebel – the young producer quoted in the beginning of this article – did just that. He decided to rule out using any title that includes the word “financial.” “I don’t have my securities license yet, so I don’t want to use the term ‘financial advisor’ right now,” he explained. What then? “I’m calling myself an ‘insurance and group benefit consultant,’ because that’s what I’m doing.” Linda Koco, MBA, is a contributing editor to InsuranceNewsNet, specializing in life insurance, annuities and income planning. Linda can be reached at linda.koco@ innfeedback.com.