MassMutual Financial’s in-house registered representatives will wear out a little more shoe leather or cut back on selling 529 college savings plans to meet new regulations separating financial planners from securities dealers.
MassMutual’s latest effort to comply with the Securities and Exchange Commission‘s rule 202(a)(11)-1 -- a recent measure requiring brokers to become registered investment advisors before offering financial plans strongly discourages its registered representatives from selling more than one kind of insurance contract or investment per client meeting. MassMutual has not put the ban on cross-selling in writing but the message has been communicated verbally in at least one branch and the firm has altered its proprietary financial planning software for registered representatives without RIA accreditation to block sales presentations displaying more than one insurance contract or investment.
Misleading?
To do so would give the appearance of engaging in financial planning instead of selling investments. Registered representatives who obtained RIA accreditation may continue selling insurance and investments simultaneously, or cross-selling, according to a registered representative at the firm. Mark Cybulski, a spokesman, declined to comment.
As a result, some registered representatives may choose to make each client visit as profitable as possible by selling insurance or annuities instead of new 529 plans, which initially generate comparatively small commissions. “If someone has a need for life insurance we cannot do the 529 or mutual funds in the same day because we’re not supposed to be doing financial plans,” the rep said.
Many MassMutual registered representatives have postponed becoming RIAs to avoid compliance procedures that occasionally delay sales by up to several weeks. The delays are caused largely by backlogs of financial plans waiting for approval at individual branches before being sent to the home office for another round of inspections, the rep said. Other registered representatives have avoided becoming RIAs because they lack the necessary Series 7 securities license and have no intention of sitting for additional examinations.