This isn't about pointing fingers at your advisor. If you have someone you trust, that's great — hold onto them.
But there's something worth understanding about how the financial industry is set up, because it affects what gets recommended to you — and what doesn't.
The licensing gap
There are two main types of licenses in this business:
- Securities licenses (Series 6, 7, 63, 65, 66) — these allow advisors to sell stocks, bonds, mutual funds, and variable products. Most financial advisors, wealth managers, and broker-dealer reps hold these.
- Insurance licenses — these allow professionals to sell fixed and fixed indexed annuities, life insurance, and similar products. Some securities-licensed advisors also hold insurance licenses. Many don't.
Here's why this matters: an advisor can only recommend products they're licensed to sell. If your advisor doesn't hold an insurance license, they simply can't offer you a fixed annuity or a fixed indexed annuity — even if it might be a good fit for your situation.
That doesn't make them a bad advisor. It just means they're working with a different set of tools.
The fee structure question
Many fee-based advisors charge a percentage of assets under management (AUM) — typically 0.5% to 1.5% per year. When you move money from a managed account into an annuity, those assets leave their management. Their fee goes down.
This creates a natural tension. It doesn't mean the advisor is acting in bad faith. But it does mean the incentive structure isn't perfectly aligned when the conversation turns to annuities.
Fiduciary vs. suitability
You may have heard the term "fiduciary." A fiduciary is legally required to act in your best interest. A suitability standard only requires that a recommendation be "suitable" — not necessarily the best option.
Most insurance professionals operate under the NAIC Best Interest Standard, which is closer to fiduciary than the old suitability standard. But it's still worth asking any advisor: "What standard are you held to?"
The bottom line
I'm not suggesting you leave your current advisor. I'm suggesting you consider getting a second perspective — especially when it comes to retirement income strategies. Two sets of eyes often catch things one set misses.
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Author of Indexed Annuity Secrets and founder of Pacific Ridgeway Insurance Solutions in San Diego. Navy veteran. Licensed financial professional, CA #4132743.
Fixed indexed annuities are insurance products, not investments. Guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. This article is for educational purposes only and is not financial, investment, tax, or insurance advice.