Wednesday, May 11, 2016

The Importance of Keeping Your Securities Registrations


By James Morris, Designated Supervisory Principal,
Questar Capital Corporation Branch Office at AAAE

If you hold FINRA series securities registrations you know the commitment, the study time, and effort needed to obtain them. You also know the value of holding these registrations in enabling you to offer your clients access to stocks, bonds, mutual funds, and other investment products that require a securities registration to be sold. In order to maintain these registrations, you must be affiliated with a broker/dealer. If you are not affiliated with a broker/dealer for more than two years, your securities registration will lapse and you must re-test.
Most broker/dealers charge various fees in the form of monthly technology or affiliation fees, in addition to setting payout percentages on the sale of securities products. Also, FINRA and the states where you are registered charge annual fees. Finally, most broker/dealers require their affiliated representatives to obtain errors and omissions insurance through the broker/dealer’s approved vendor.

A very common conversation I have with financial professionals concerns keeping a securities registration active or letting it lapse. Based on the fees just referenced, it can be difficult to justify maintaining your securities registration if your production does not warrant the cost. Many financial professionals offer products that do not require a securities registration to be sold, such as fixed or fixed index annuities.

However, as you may know, the only thing that is certain in the financial services industry is change – changes in the form of Department of Labor, FINRA, and state insurance department oversight concerning fixed index annuities and how these products are classified and how they should be sold. There has been significant discussion within the respective regulatory agencies about reassigning supervision of fixed index annuities or classifying these products as securities, which would require you to hold a FINRA securities registration to offer them to your clients. If you are someone that has taken the time to obtain your FINRA securities registrations, it may be in your best interest to maintain affiliation with a broker/dealer.

Also, the recent DOL Fiduciary rule aims to increase regulation around servicing retirement accounts, even any funds that come from those accounts. While this legislation and how it will ultimately end up being enacted and enforced remains to be seen, having a securities registration may better equip you to continue to serve your retiring clients and impacted accounts. Please keep in mind that this is part of a larger DOL discussion, but it is important to note that having a securities registration would be an asset should similar legislation be enacted.

Finally, being a more well-rounded resource to potential and current customers concerning financial decisions is an enormous benefit and differentiator in a crowded marketplace. If you are securities-registered, your customers do not have to seek another financial professional for other product offerings, which can make you more valuable.

If you would like to discuss the value of retaining your securities registration or how we can assist you in obtaining securities registrations, please call me at 800.321.3924 x159.

James Morris | Designated Supervisory Principal
Questar Capital Corporation Branch Office at AAAE
Ph: 800.321.3924 x159 | Dir: 734.786.6159
jmorris@questarcapital.com

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Securities offered through Questar Capital Corporation (QCC). Member FINRA/SIPC. Advisory services offered through Questar Asset Management, a registered investment advisor. Ann Arbor Annuity Exchange is an affiliate of QCC.
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Designed for Financial Professionals.

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