“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.”

Just when I feel that I’ve seen everything, along comes something that surprises even this jaded soul. This development, however, strikes me as one with potentially disastrous consequences for unsuspecting fixed annuity producers whose desire for a way out of their current business turmoil may prove to be the first step in a career-ending, bad decision. Is the “Wild, Wild West” of annuity-land now setting its sights on the rarefied world of Registered Investment Advisors?

A few days ago I received a spam email from an organization called Registered Independent Advisors. As I read this email it struck me as quite clearly designed to exploit the present high levels of anxiety and frustration among annuity agents. If you are a regular reader of this blog you know that I have written at length about annuity agents who are been battling a generally hostile marketing environment as well as the intensified scrutiny of securities regulators.

Many who are also registered representatives have seen their broker-dealers intercede in their equity indexed annuity sales and marketing activities with the result that certain of the products most favored by some producers have been deemed by their broker-dealers’ guidelines to be unsuitable.

While the message from Registered Independent Advisors was both coy and somewhat different that so many other creative solicitations I’ve read since 05-50, it was also quite similar. In fact, the message’s first bulleted question states, Do you write over $1,000,000 in EIA premium regularly?” It then goes on to ask, “Are you concerned about the SEC’s Free Lunch seminar sweeps?” And, “Are you unhappy with BD restrictions and haircuts on EIA business?” These are classically Independent Marketing Organization (IMO) themes.

The email message also goes on to state that “we”, meaning Registered Independent Advisors, is not a “marketing organization” but instead is seeking to provide “a real business strategy for 2007 and beyond.”

I’m not sure what “real” is meant to imply. The relevant question is, in my judgment, will taking on the fiduciary obligations of a Registered Investment Advisor prove to be a viable strategy for annuity agents already dealing with a level of complexities they never expected?

An effort to entice both non-registered annuity agents as well as registered reps into the world of Registered Investment Advisory- and all that that implies- strikes me as a topic worthy of exploration. I’ll have much more on this in the days ahead.

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