Insurance advisors holding mutual fund licences are the rule rather than the exception, according to Investment Executive‘s 2004 Insurance Advisors’ Report Card.
Over the past few years, most insurance advisors have added mutual funds licences to their insurance licences, and they are increasing the number of professional designations they hold, as well.
On average, 79% of insurance advisors surveyed this year hold mutual fund licences, up from 75% of those surveyed for the 2003 Report Card. The most popular designations in the insurance sector are the certified financial planner, the chartered life underwriter and the chartered financial consultant, all of which experienced year-over-year growth in the percentage of advisors holding these designations. The largest increase was for CFPs, rising to 46% of the insurance advisors surveyed from 32% in 2003.
Clarica Financial Services Inc. leads the way in dual life and mutual fund licensing, with 100% of the firm’s advisors surveyed holding both licences. Jack Garramone, the Waterloo, Ont.-based firm’s vice president of independent career advisors, says Clarica strongly encourages advisors to earn the appropriate qualifications. “To attend some conventions, you are required to have a mutual fund licence,” he adds.
Other firms that are above the industry average in this area include Freedom 55 Financial, State Farm Canada and Great-West Life Assurance Co. These firms are all registered with the Mutual Fund Dealers Association.
Nick Pszeniczny, senior vice president of Freedom 55 Financial in London, Ont., says it is now mandatory for new advisors at that firm to hold both licences. “They cannot start without a mutual fund and a life licence,” he says.
Many of the insurance advisors surveyed agree that holding multiple licences is a step in the right direction. “I think companies should push to have their advisors multi-licensed. It’s better for the client,” says one Clarica advisor.
“You should do it to provide clients with a range of products and services,” adds another.
Most advisors see multiple licences as a way to provide better customer service, but some also see this as another source of income. “It’s added a line I never had before,” says a State Farm agent. “It helps me keep clients and provides another source of income.”
Despite talk of multiple licences, one place insurance advisors haven’t gone is adding a securities licence. Only 3% of the advisors surveyed in the Insurance Advisors’ Report Card had a securities licence, and none of the firms in the 2004 survey are registered with the Investment Dealers Association of Canada.
And the trend toward multiple licences is not without its skeptics. “It’s appearing more and more, not that it’s healthy, but there’s pressure from the company to hold multiple licences,” says a Freedom 55 advisor. “The company wants to build a fence around its clients. The problem is there is only so much expertise to go around, so it becomes a matter of greed.”
A few firms have not yet jumped on the multiple-licensing bandwagon. Equinox Financial Group Inc. and The Co-operators Group Ltd. are well below the industry average in this area, with 63% and 53%, respectively, of their advisors dually licensed. Independents and MGAs have 70% of their advisors dually licensed.
The Co-operators says it encourages and expects new advisors to get their mutual fund licences; however, the Guelph, Ont.-based company is not registered with the MFDA. The firm has an arrangement with Quebec City-based mutual fund dealer Investia Financial Services Inc., a member of the Industrial Alliance Group.
Daniel Dessureault, general manager of Toronto-based Equinox, says it prefers to recruit advisors who intend to become licensed. “But we don’t have incentives or programs to encourage them to get more designations,” he adds.
Some firms, however, reimburse their advisors for the costs of courses leading to professional designations, and it shows in the numbers.
Great-West Life advisors were well above the industry average in all three professional designations, with 73% holding CFPs, 54% holding CLUs and 35% with CHFCs.
Leander Dueck, Winnipeg-based
Great-West Life’s senior vice president of individual distribution, says the company encourages all advisors to obtain professional designations and reimburses the advisor for tuition fees once he or she has successfully completed a program of study.
State Farm, Clarica and Freedom 55 also refund tuition costs when their advisors complete a designation. Clarica reprints an advisor’s business cards and letterhead to showcase the designation.