Are financial advisors taking over producer business?

A new report suggests many financial advisors are starting to dispense insurance advice to their clients, potentially stepping on agent toes.

Are financial advisors taking over producer business?

Insurance News


The traditional producer distribution channel has faced a number of disruptions in recent years, including competition from direct writers, payroll providers and technology firms like Google. Now, a number of financial advisors are moving into the insurance arena and raising questions about the role of the producer.

According to a Monday report from CNBC, more and more financial advisors are adding insurance analysis and review to their list of client offerings – a service traditionally performed by an agent or broker.

National Association of Insurance and Financial Advisors President Juli McNeely – herself a CFP with McNeely Financial Services – says many advisors are “mov[ing] to the insurance side” and taking advantage of NAIFA’s education and training offerings as clients look to save time by getting all of their financial needs taken care of in one stop.

In exchange, financial advisors receive commissions from insurance companies, just like a producer.

“I am solidly in the commission model. About 80% of my clients are smaller accounts who wouldn’t meet minimum asset requirements,” McNeely told CNBC. “In a very small community like this, it has to fit the client base of the advisor. It’s the best model for my practice.”

Others simply wear both hats, stressing to clients when they are acting as an impartial financial advisor and when they are acting as a producer.

“I have a separate risk-management [piece] of my practice. Since it is one of the disciplines with the CFP designation, I use it as a tool to help clients,” Craig Cowles, CFP and partner with Cardinal Wealth Advisors, told CNBC. “Don’t be afraid to add additional compensation for the firm if you clarify with the client each area you’re working in.

“Someone is going to get paid if they need the insurance, so we offer them the option to work with us, since we already know some of the best alternatives.”

However, not all financial advisors accept commission. In fact, some models could even support producers who have partnerships with advisor firms.

At Rinehart Wealth Management, financial advisors work on a fee-only basis, providing insurance analysis and recommendations before turning clients over to two brokers with whom the firm has partnered.

“If the client needs additional insurance or we think there are better alternatives, we bring in an insurance professional to our office to meet with the client,” financial advisor Andrew Savant told CNBC. “It’s good for the brokers, too, because they know they don’t have to do any selling.”

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