September 2007

Part Two: A Deadly Cocktail? The “Extreme Makeover” of Annuity Agents into Registered Investment Advisors

pitchBased upon the number of responses it elicited there clearly was no shortage of interest in Part One of this series. I can understand why. Many annuity agents have been thrust into something of a netherworld by events largely beyond their control.

Annuity agents are experiencing a continuing disruption of their traditional sales practices that began with the issuance of NASD (FINRA) NTM 05-50. For agents it can seem as though everything they once viewed as stable has come under assault including their public image, the products they sell, the advice they provide, the seminars they use, not to mention the comparatively lax suitability and compliance standards from the recent past. It’s no wonder that many agents wish for a quick and easy end to the pain. But pain relief comes at a cost than can be significant.

Scare tactics are clearly not out-of-bounds when used by those pitching annuity agents on the Registered Investment Advisor “answer.” “REAP THE REWARDS OF INDEXED ANNUITY SALES WITHOUT THE FEAR” is a prominent theme of the “pitch.” But is becoming a fiduciary advisor really the answer?

In Part One of this series I argued that the RIA option may not prove viable for many annuity agents. The reason is that for the RIA transition to be successful, an annuity agent must be willing to undergo a radical transformation in terms of allegiance (in both a practical and strict legal sense) and in the manner in which he or she is compensated. How many will sign-up to undergo such a dramatic transformation?

It was advertising directed to annuity agents that I characterize as exploitive that first got me interested in this subject back in April. I saw print and video advertising designed to convey both overt and covert messages. The thrust of the advertising- the “pitch”, if you will- seemed to convey that it’s possible for annuity agents to retain their customary sales and marketing strategies and compensation model while also operating as a Registered Investment Advisor.

This assertion was and is the “rub” as far as I’m concerned. I’m all for swelling the ranks of RIAs. However, I also believe it is grossly unfair to lead annuity agents to conclude that they can continue to legally represent the best interests of insurance companies, continue to rely upon rich, first-year compensation, and, act as a fiduciary all within the framework of a single client relationship.

Why Do the Ads Neglect to Mention the Heightened Responsibilities Fiduciaries Assume?

Why is there is no mention of fiduciary responsibility in the ads for the “pitch?” Or, for that matter, any mention of the “rewards” for consumers? Is it because the purveyors of the “pitch” believe it is possible for an individual to act as an indexed annuity agent and a fiduciary at the same time with the same client? Or, is it that they simply prefer to avoid mention of the substantial and complex responsibilities that come with acting as a fiduciary advisor?

In Part One I attempted to demonstrate through the comments of experts including experienced RIAs that the “pitch” is dangerous if not bogus. Attempting to induce annuity agents to believe that they can easily side-step broker-dealer compliance is a disservice to the very people the proponents of this approach claim they are serving.

So let’s now examine what can happen when an individual producer seeks to operate as both a traditional annuity agents and a Registered Investment Advisor at the same time.

Do RIAs Receive Extra Protection? Can $2,000,000 in Indexed Annuity Commissions Get You Noticed?

Meet Mark K. Teruya, president of USA Wealth Management L.L.C.

tenuyaMark Teruya’s story seems to be a sad one. I don’t know him but I’d bet he is a decent person who is liked by his clients. I doubt that Mr. Teruya ever imagined he’s be in all kinds of trouble. He is by all accounts in a great deal of trouble. He is also a registered investment advisor based in Honolulu, Hawaii.

Judging by some of his published articles Mr. Teruya was a very effective marketer. He wrote numerous articles for newspapers in Hawaii that were focused on providing pro-consumer financial advice. As an example, click here to read one of his articles in which he blasts high mutual fund expenses. I suspect that authoring such articles was integral to his overall annuity marketing strategy, i.e. cultivate a well known and strong pro-consumer identity in order to create a favorable prospecting and selling dynamic. This is not an unusual marketing strategy for annuity agents to pursue.

On September 10 the online version of National Underwriter highlighted a story on Mr. Teruya, a Hawaii-based RIA. The first paragraph of National Underwriter’s piece included this:

“The U.S. Securities and Exchange Commission is accusing an investment advisor of using free lunches to persuade older consumers to shift money from existing investments into equity indexed annuities.”

The story also contains this:

Both state and federal regulators have accused Teruya and his firm of using breakfast and dinner seminars to attract retirees, then arranging for one-on-one follow-up meetings.

What? Did you hear that? Using seminars to attract retirees? And make appointments with them? I don’t know whether to laugh or weep. These are usual and customary marketing tactics have been a relied upon by thousands of successful annuity producers.


seminar-teruyaMr.Teruya has been charged by both the SEC and the Hawaii Securities Commissioner. The SEC is seeking “disgorgement of ill-gotten gains with prejudgment interest, and civil penalties.”

If you don’t know what “disgorgement” means it refers to the repayment of ill-gotten gains that is imposed on wrong-doers. Teruya may be forced to refund the $2,000,000 in commissions he earned- plus interest… and also be forced to pay substantial penalties, to boot. I hope he’s been a good saver.

Where it Breaks Down

Just reading the headlines tells you that it’s simply not viable for an annuity agent to observe traditional sales practices while acting as a fiduciary advisor. Could it be more plain?

“The U.S. Securities and Exchange Commission is accusing an investment advisor of using free lunches to persuade older consumers to shift money from existing investments into equity indexed annuities.


Teruya committed fraud, …”when he failed to disclose that he was an insurance agent in a position to collect large commissions on the purchase of EIAs.” the complaint said.

Destroying Careers at Digital Speed

The annuity industry has been far too slow in utilizing digital content and web-based communications strategies to help its agents reach more annuity prospects in a compliant manner. The price for this delay is being paid on a daily basis. For example, we’ve observed the fallout from agents and IMOs placing non-compliant presentations on the Internet (for more see my article in the September issue of Broker World magazine called “Dangerous Trends In Annuity Marketing Put Industry And Brokers In Jeopardy“). I know this particular article resonated with many annuity agents based upon the number of phone calls I’ve received from agents since its publication.

In the case of Mark Teruya we can see how an agent’s reputation can be damaged and his career potentially destroyed at digital speed:

September 7
Teruya is accused of fraud by the SEC.

September 11
Teruya’s SEC charges make the front page in the same newspaper he previously his columns had previously appeared.

September 12
The SEC posts the results of its seminar sweeps (likely heralding a sea change)

September 12
Major newspapers across the U.S, produce stories about the SEC action and, or, Teruya. One example: In Tampa, Florida both major papers produce front page, non-syndicated, locally authored articles discussing seminar abuse.

You Can Run But You Can’t Hide

The “pitch” says to annuity agents that they can seek shelter under the umbrella of RIA status. Don’t believe it. It didn’t shelter Mark Teruya. I’d bet money that he is now facing penalties that are far more severe than what the state insurance department might have sought. And he is facing these harsher penalties precisely because he is a registered investment advisor.

According to Joseph W. Maczuga, a Certified Fee Insurance Specialist from Troy, Michigan, “Those who are recruiting agents into the ranks of Registered Investment Advisors under the premise (fiduciary and annuity agent at the same time) that you have shared are, in my opinion, fraudulently presenting erroneous statements as fact. They do not appear to be knowledgeable about the provisions if the Investment Avisors Act of 1940, or the court decision and its basis in the case of the Merrill Lynch Rule. Unless, that is, they have developed a mischievous “end around” process that they feel will shelter them from clear and concise regulatory language. Our industry has a history of creating circumventing concepts to move product.”

How Far Indexed Annuities Have Fallen

The fallen reputation of indexed annuities is a tragedy of grand scale. The underlying value proposition indexed annuities provide- safety of principal combined with upside growth potential- is not only legitimate it is vital to millions of Americans as they approach retirement and enter the Transition Management phase. Unfortunately, what has played out over the past decade, “The Process” – in which the activities of good and decent people leads to sub-par results- has zapped the industry of its vitality at a critical moment. Rome really is burning. And lots and lots of very decent people are being hurt.

Not too many years ago it was an accepted belief that seniors were the most qualified purchasers of deferred annuities. Now it is generally believed that seniors require protection from deferred annuities. It’s not difficult to imagine business school students in the future studying the disastrous decline in public perception of an important industry as an example of how not to conduct business.

This sad state of affairs will not be repaired until fundamental reform occurs, technology comes to the forefront and the focus on consumers’ best interests becomes everyone’s top priority.

©Copyright 2007 David A. Macchia. All rights reserved.

RIIA Holds Annual Meeting, Communications Conference & Awards Dinner; Professor Zvi Bodie Cited for Lifetime Achievement

Apologies to OppenheimerFunds’ Kathleen Beichert, Chair of RIIA’s Research Committee as well as to RIIA’s research partners, Elvin Turner of Turner Consulting, and Larry Cohen of SRI-BI. Also, my sincere apology to JordenBurt’s Joan Boros.

A cut/past error earlier caused the contributions of these individuals at RIIA’s Annual Meeting to not be mentioned in yesterday’s article (I create these articles in Word and them past them into the blog application). Please see the section I’ve added in the text below.

On Monday of this week the Retirement Income Industry Association (RIIA) held its Annual Meeting and Awards Dinner. Over the course of a long but stimulating series of presentations attendees were left with a vivid sense of the unique value RIIA brings to the retirement income industry. Where else does the cross-silo retirement income conversation take place?

RIIA’s Founding Chairman, Francois Gadenne, kicked-off the day with a presentation summarizing RIIA’s mission and goals including a report card on the substantial progress that has been made in achieving them.

The various morning sessions offered specific insights into the important work being undertaken by RIIA’s various committees. Laura DeFraia (Wachovia), Laura Varas (Financial Research Corporation) and Elmer Rich (Rich & Co.) highlighted results from RIIA’s Employment Survey.

Rick Nersesian, formerly Director of Retirement Income at UBS and now a private consultant, discussed ongoing efforts to expand RIIA’s membership ranks.

Royal Bank of Canada’s Ron DeCiccio, Chair of RIIA’s Education Committee, was joined by Retirement Learning Center’s John Carl, in a presentation about the expansion the curriculum that will lead to the awarding of the professional designation, RIIA Retirement Income Expert (RIE).

Kathleen Beichert, Chair of RIIA’s Research Committee, invited Elvin Turner and Larry Cohen to describe RIIA’s latest research efforts. Larry and Elvin delivered a concise overview of RIIA’s next research report addressing, in part, the number of financial relationships consumers in different market segments maintain and the implications arising out of a shrinking of that number as retirement draws near. Like, the first research report in this series, the new report will provide completely new insights.

Russell Investment Group’s Richard Fullmer, Chair of RIIA’s Methodologies Committee, introduced RIIA’s Statement of Principles. These principles govern software used to illustrate retirement income projections. Larry and Elvin delivered a concise overview of RIIA’s next research report addressing, in part, the number of financial relationships consumers in different market segments maintain and the implications arising out of a shrinking of that number as retirement draws near. Like, the first research report his series, the new report will provide completely new insights.

Next, Joan Boros of JordenBurt LLP delivered a presentation on the organization of RIIA’s Compliance Committee including an overview of the Committee’s goals and future value to RIIA members.

Matthew Greenwald (Matthew Greenwald & Associates) delivered the lunchtime Keynote address entitled, “The Inevitable Grassroots Change”. Greenwald presented a moving and candid analysis of US retirement security in the context of real life examples.

In the afternoon it was my privilege to Chair RIIA’s Communications Conference. I began with remarks detailing the reasons why I believe that, for retirement income businesses, success is synonymous with excellence in communications.

The program then shifted to multiple presentations from elite financial advisors – “Income Pioneers”- who have already made a successful transition to income generation oriented practices.

Phil Lubinski, CFP® and Briggs Matsko, CFP®, demonstrated their communications techniques and financial strategies for income generation. Rick Miller, Ph.D., CFP®, talked about the impact of technology on fiduciary advisors and nimble product providers.

Harold Evensky, CFP, ®, summarized how financial advisors should be preparing to meet the retirement income needs of the Boomer generation. Evensky provided helpful glimpses into the strategies he has used to manage clients’ expectations across volatile market conditions.

The financial advisors’ presentations were enormously insightful and really drove home the point that the genius of successful advisors is due, in part, to their genius as effective communicators. I concluded the Communications Conference with the observation that Lubinski, Matsko, Miller and Evensky are members of an elite minority of advisors, and that the real challenge for the industry will be in introducing the educational tools and communications technologies needed by the 95% of advisors who have yet to acquire equal income planning skills.

RIIA’s Lifetime Achievement Award Goes to Professor Zvi Bodie

The next part of the program was the presentation by Research Magazine Editor, Gil Weinreich, of RIIA’s Lifetime Achievement Award to Professor Zvi Bodie of Boston University. Bodie is the Norman and Adele Barron Professor of Management at BU. He was selected for the award for his many achievements in applied research. Bodie holds a Ph.D. from the Massachusetts Institute of Technology and has served on the finance faculty at the Harvard Business School and MIT’s Sloan School of Management.

Professor Bodie’s textbook, Investments, is the market leader and is used in the certification programs of the Financial Planning Association and the Society of Actuaries. His textbook Finance is coauthored by Nobel Prize winning economist, Robert C. Merton. Professor Bodie’s latest book is Worry Free Investing: A Safe Approach to Achieving Your Lifetime Financial Goals.

Prior to the RIIA Excellence in Communications Awards Dinner there was a cocktail hour which included a book signing opportunity with two noted authors, Terry Burnham (Mean Markets & Lizard Brains) and Harold Evensky (Retirement Income Redesigned).

The Keynote Address was presented by Professor Bodie. His talk, entitled “Encouraging Adaptation” was funny, motivating and highly insightful. Bodie has a unique capacity to both simplify complex issues and pummel conventional wisdom. For instance, I’d bet money that his comments on Target Date mutual funds caused many audience members to re-examine their views on these popular investment vehicles.

After Professor Bodie’s address it was time to present the RIIA Excellence in Communications Awards in the categories of Best Advertising Award, Best Retail Communications Award and Best DC Communications Award.

RIIA’s media sponsors selected the various award winners from the many entries submitted. Armee Lee chaired the Investment Wires Committee that selected Nationwide Financial as the winner for its “Life Comes at You Fast” campaign. AXA was runner-up for its “800-pound Gorilla” campaign.

Evan Cooper of InvestmentNews presented the Retirement Income Communications Award in the New Media category to Morningstar for its Retirement Income presentation, part of Pincipia Presentations & Education module. Runner-up went to Jackson-National Life for the “But What if I Live” DVD presentation.

In the print category, Columbia Management took the top honors for its Columbia Management Retirement Learning Center. Securities America Investments was runner-up for “Imagine Your Life without Limits.”

Allison Cooke
of Sponsor of PLANSPONSOR presented the DC Advisor Award to Genworth Financial for its “ClearCourse Personalized URLs.” Receiving the runner-up award was Pacific Life for its “Destination Independence” piece.

Francois Gadenne closed out the eventful day with a gracious thank you to all that participated.

In thinking about the RIIA event I feel that attendees gained tangible value, and that RIIA may have exceeded the expectations of some. Important insights emerged that could only have come out of a meeting where multiple silos across multiple industries are brought together in a single conversation. That’s both unique in the retirement income industry and very much needed.

©Copyright 2007 David A. Macchia. All Rights Reserved

Inconsistent Odds in Monte Carlo! Developing Needed Standards for Retirement Income Planning Tools

Since the formation of the Retirement Income Industry Association (RIIA) a number of initiatives of genuine importance to its members have been launched. One of the most important is an effort to develop sound principles for the creation of industry-wide standards for the development of retirement income calculators, tools and illustrations that promote various retirement income products and strategies. On August 10 RIIA issued a press release on this subject but the effort is deserving of additional attention.

Led my Russell Investment Group’s, Richard Fullmer, CFA, RIIA’s Methodologies Committee has crafted and introduced a Statement of Principles to provide needed guidance in this critical area. Other members of the Methodologies Committee that assisted in the development of the Statement of Principles include Moshe Milevsky (IFID Centre), Anna Abaimova (IFID Centre), Peng Chen (Ibbotson Associates), Ben Williams (Retirement Engineering, Inc.), Phil Edwards (Standard & Poors), Pirooz Vakili (Boston University), Kazi Ariff (Bank of America), Kim McSheridan (Symetra Financial), Lowell Aronoff (Cannex Financial Exchanges), Bob Padgette (Klein Decisions) and Thomas Idzorek (Ibbotson Associates). The Methodoligies Committee will deliver a presentation on its work at the upcoming RIIA Annual Meeting and Awards Dinner to be held in Cambridge, Massachusetts on September 16-17, 2007.

Says Fullmer, “A significant number of retirement income projection models have been introduced into the marketplace over the years, and RIIA believes that many of these models may need improvements in disclosing key underlying assumptions or limitations. In addition, the output of various projections differs widely even with consistent input. This may lead to confusion among the public which threatens a loss of confidence in the financial services industry.”

Because of these concerns and inconsistencies, the RIIA Methodologies Committee took on the task of establishing a Statement of Principles as the first step in creating industry standards for developing illustrations, calculators, and other materials
necessary for retirement income planning and promotions. The Principles seek to promote the use of clear and effective modeling techniques, explanation and communications through complete disclosure of assumptions and the use of consistent terminology. To view the Statement of Principles, go to

RIIA’s Methodologies Committee also intends to provide:

A set of guidelines to these Principles which will provide guidance on meeting the RIIA standards.

A set of “calibration points” by which model developers can compare their assumptions and results against.

“As the baby boomers march into retirement, their shift from focusing on accumulating retirement savings to creating a secure retirement income makes consistency, clarity and understanding of income modeling more urgent that ever,” contends Francois Gadenne, Founding Chairman of RIIA and CEO of Retirement Engineering, Inc. “RIIA is an organization that succeeds because of its members’ active leadership and participation. The members of our Methodologies Committee felt strongly that RIIA take responsibility for improving projection models because a failure to do so is a disservice to both the retirement income industry and the clients we serve. It is gratifying to see the early results of their important work,” says Gadenne.

A full report on the Statement of Principles as well as updates from the other RIIA Committees will be provided at the upcoming RIIA Annual Meeting and Awards Dinner on September 17, 2007 at the Royal Sonesta Hotel Boston in Cambridge, MA.

To learn more or register for the event, please go to

Part One: A Deadly Cocktail? The “Extreme Makeover” of Annuity Agents into Registered Investment Advisors

Earlier this year I published an essay on the burgeoning effort to recruit annuity agents into the ranks of Registered Investment Advisors. While I haven’t written about this issue since that time I’ve thought about it a great deal. So have a lot of other people including some who see an opportunity to create lucrative new businesses by disrupting independent agent distribution. I’m all for free enterprise. But I’m opposed to initiatives that may seek to exploit agents who are frustrated by challenges they didn’t’ ask for or expect.

Today’s article is the first in a series devoted to the agent-to-RIA conversion “pitch.” The more I delve into this the more concerned I become. One of my goals with this series is to help protect annuity agents by providing them a balanced perspective on the RIA option. It’s my hope that a thorough understanding of the risks and potential rewards will lead to good decision-making.

Back in April I expressed caution about the pitch to annuity agents that urges them to become registered investment advisors. My early caution has crystallized into a strong belief that for most annuity agents the RIA option is, well, unsuitable.

Opting to become an RIA may be a viable course of action for annuity agents willing to submit to a truly extreme makeover in terms of their stated allegiance and compensation model. How many agents will be willing to drink the fiduciary cocktail and take on the related responsibilities that come with observing a fiduciary duty once they understand all of its ingredients?

What’s in the Fiduciary Cocktail?

Ahh, fiduciary duty! That’s the key issue, isn’t it? I checked Wikipedia’s definition of fiduciary duty and this is what I found:

“A fiduciary duty is the highest standard of care imposed at either equity or law. A fiduciary is expected to be extremely loyal to the person (the principal) to whom they owe the duty. They must not put their personal interests before the duty, and must not profit from their position as a fiduciary, unless the principal consents. The fiduciary relationship is highlighted by good faith, loyalty and trust.”

“When a fiduciary duty is imposed, equity requires a stricter standard of behavior. It is said the fiduciary has a duty not to be in a situation where personal interests and fiduciary duty conflict, a duty not to be in a situation where their fiduciary duty conflicts with another fiduciary duty, and a duty not to profit from their fiduciary position without express knowledge and consent. A fiduciary cannot have a conflict of interest.”

The very last sentence, “A fiduciary cannot have a conflict of interest” would seem to crystallize the key challenge: how can an individual simultaneously act as a fiduciary and an agent for an insurance company within the framework of a single client relationship?

It’s not possible in the opinion of Rick Miller, a Certified Financial Planner from Cambridge Massachusetts and a member of the National Association of Personal Financial Advisors. According to Miller, “An annuity agent who is simultaneously a fiduciary sounds like a contradiction in terms at the most basic level. As a fiduciary the advisor must act in the best interest of the client. As an agent, the advisor must act in the best interest of the insurance company. I wouldn’t want to be the advisor who has to attempt to resolve that conflict.”

The website for Miller’s firm, Sensible Financial Planning, states: “We accept no commissions or any other payments from any financial product or service provider. We work only for you.” That description stands in stark contrast to the way annuity agents typically operate.

The August 2007 edition of Investment Advisor Magazine contains an article written by Bob Clark that stated, “The inescapable conclusion for anyone looking at the financial services industry and its marketing machine is that financial consumers—middle class and affluent—are completely ignorant of the fact that their stockbrokers or insurance agents are not fiduciaries, and have no legal obligation to put their clients’ interests ahead of their own or their firm’s.”

Some annuity agents may not fully understand the legal structure of the “principal-agent relationship” that governs their obligations to the insurance companies they represent. In the same manner that stockholders of a corporation (the principals) hire managers (the agents) to act in their best interests, the insurance company (principal) hires agents to act in its best interests. The fact is, under this relationship framework the primary duty an annuity agent undertakes is to represent the insurer’s interests, not the client’s.

There’s No Escaping Regulation

I sought the opinion of Joan Boros, who is a friend and a well-known expert in securities law. Joan, an attorney with the prestigious Washington, D.C. law firm, JordenBurt LLP, had this to say about agents contemplating registration as investment advisors:

“Agents should be aware that registration as an investment adviser carries its own set of burdens and vulnerabilities; there are always trade-offs. At a minimum, agents are subject to a whole new regime of regulation in each state where they operate. On a more challenging level, plaintiff’s lawyers and regulators have asserted the view that as an adviser the agent owes a fiduciary duty to the prospect or customer. While that may not be the outcome, threading through fiduciary duty obligations makes suitability determinations seem like a walk in the park.”

Yet the advertising coming at annuity agents sounds like the RIA makeover is a walk in the park. “End broker-dealer harassment and haircuts” goes the RIA pitch. To annuity agents who have seen their businesses impacted in ways they view negatively since the issuance of NASD NTM 05-50, it’s a powerful message. Is “harassment” a code word for rigorous broker-dealer compliance when used in the context of the RIA pitch? I suspect it is. And what annuity producer doesn’t want to earn more money by eliminating broker-dealers’ commission “haircuts?”

Annuity agents who have seen broker-dealers disapprove their relied-upon annuity advertising and sales presentation materials including letters, seminar presentations and display ads, will surely be attracted to the notion of becoming their own compliance officers. But how many annuity agents possess the knowledge and experience to develop compliant advertising in the context of a registered advisory practice? And what of the longer-term consequences following biennial audits of registered investment advisors’ practices including their advertising? Could annuity agents be setting themselves up for an unpleasant future shock?

Possible Unfulfilled Financial Expectations

One shocking change annuity agents who become RIAs may encounter in the future is reduced income. Agents who are accustomed to making larger commissions as their sales volumes increase may find that new approaches to annuity compensation may alter their expectations. According to Paula Hogan, Principal of Hogan Financial Management, a Milwaukee-based, fee only firm providing comprehensive financial planning services, “When people wear two hats it’s very confusing to the consumer. Consumers have a right to know who the advisor is working for.”

Hogan also believes that the transition to income-generation will lead to new ways to compensate advisors: “The issue you raise (compensation) is also an important one because it speaks to changes taking place in the financial services industry as people shift from accumulation to retirement income distribution. Annuities will play an increasingly important role as more and more people seek to insure their standards of living in retirement. I believe that advisors have real value to offer their clients and they deserve to be paid for it. However, agents’ traditional commission-based compensation models may prove as unworkable as advisors’ AUM-based models. It may be that new approaches to compensation will be needed including flat-fee arrangements.”

Fewer Advisors, Greater Responsibility

Boomer retirement is certainly likely to propel increases in annuity sales. But according to Harold Evensky, Chairman of Evensky & Katz, a wealth management firm headquartered in Coral Gables, Florida, annuities fit in a larger context of retirement planning which must prioritize the best interests of consumers. Says Evensky, “There’s good news for professionals in fields related to financial planning. The need for quality advice for retiring boomers is fast outgrowing the current supply of practitioners. However, as investment advice is often the core element of a good retirement plan, advisors need to ratchet up their knowledge of investment issues and register as Investment Advisors with the State or SEC. Doing so will meet their legal responsibility and insure that they are legally committed to placing their client’s interest first.”

Key Questions

Agents considering the transition to RIA status should evaluate the move carefully and ask themselves some important questions:

Am I willing to place the interests of my client ahead of my own?

Am I willing and able to accept an entirely new method of compensation with the result that my compensation may decrease?

And, under what legal framework do I wish to operate?

The potential answers to these questions imply an interesting set of trade-offs, opportunities and costs.

©2007 David A. Macchia. Al rights reserved.

About the Unique Opportunities for Attendees at RIIA’s Annual Meeting and Awards Dinner

Summer’s over, September is upon us. That means I have to get back to work on this magazine; lots of interesting topics to be explored, and some fantastic interviews to publish! Tomorrow I’ll publish part one of a multi-part series on the efforts underway to remake annuity agents into Registered Investment Advisors.

One of the major industry highlights in September is the Retirement Income Industry Association’s Annual Meeting and Awards Dinner.

In just about 2 weeks from now- September 17, 2007 at the Royal Sonesta Hotel, Boston – RIIA’s Founding Chairman, François Gadenne, will convene what is shaping-up to be a very unique event. With many of my readers active participants in the retirement income industry, you’ll not want to miss the opportunity to attend this one-of-a-kind gathering. Here’s how François describes the meeting:

The Annual Meeting and Awards Dinner provide us an opportunity to meet with a large group of Financial Advisors (FAs), their key membership organizations and their specialized trade magazines to learn, from their perspective, how well the industry is doing during this transition from asset accumulation to income distribution. We expect that attendance will range from 150 to 200.

One key question directed to FAs that will be explored at the meeting has already been publicized in our conference promotion materials:

“Do you know how to build a successful retirement income practice while the industry is slowly moving from an accumulation focus and towards a retirement income focus?” It’s an important question that will be answered by an elite group of advisors who have already successfully made the transition to income-generation practices.

The structure and content of the conference is meant to attract FAs who are interested in retirement income issues and want to do something practical about it, now.

The value of the conference for RIIA’s Regular Members and conference sponsors is that up to 50% of the audience will be FAs and that there will be plenty of time to interact with them.

During the morning sessions, the Committees will present the relevance of their work for FAs. In particular, look for key announcements and developments from the Research, Education and Methodologies Committees.

During the afternoon sessions, the Communications Conference will focus on the communications needs of FAs during this time of transition. RIIA’s Committees as well as experienced and successful Financial Advisors will present what they have done to address the question and their results to date. Their insights will be valuable to any retirement income organization looking to maximize success.

The lunch keynote (Matt Greenwald), afternoon keynote (Harold Evensky), and dinner keynote speaker (Zvi Bodie) are leaders in the field who have relevant messages for FAs.

Our Noted Authors (Terry Burnham and Harold Evensky) will sign books that were selected because they have relevant messages for FAs.

During the dinner, the RIIA Awards will recognize companies whose work and communications are particularly helpful to FAs during this time of transition.

Given the attendees list, much of the value-added will take place during the breaks, dinner, and desert/after-dinner drinks.

To register for the Annual Meeting, please visit