Agents Beware of IMOs Offering RIA Services (updated 2015)
By: Roccy DeFrancesco

                I did a newsletter last spring warning insurance agents about IMOs pushing RIA/IAR services.  Since it’s been slightly over a year, I thought I would update the article. To read my entire 2014 “Agents Beware of IMOs Offering RIA Services,” click on the following link:

                I started out the article by reminding insurance-only licensed advisors that the writing is on the wall and that I believe all advisors will eventually be forced to obtain a Series 65 license (even if all they want to do is sell fixed products). My opinion has not changed.  

                IMOs are now offering RIA/IAR services—there is a trend in the industry for IMOs to offer  insurance agents a securities platform of some sort. Why is that the trend?

                1) IMOs are afraid if they don’t offer one that another will, and will steal their agents.

                2) Many are fearful (and rightfully so) agents are going to be forced to get a securities license and they want a platform their advisors can use.

                3) It can be a huge profit center for IMOs.

                The problem—the problem is that almost every IMO’s AUM platform I’ve reviewed is either bad or really bad if the goal is to protect clients from downturns in the stock market while still generating acceptable rates of return.

                Simple comparison—one of the largest IMOs in the industry has been building a very large RIA. Last year I compared this IMO’s RIA platform to the one I recommend. There really was no comparison. This year I wanted to update the numbers and give a little different perspective on how dramatically different one RIA can be from another.

               To download the 2014 UPDATED actual historical returns of both RIA platforms, please click on the following link: The following numbers are net of fees.





Average ROR

Big IMO’s RIA’s top 3 strategies





POM Planning's top 3 conservative strategies





POM Planning's top 3 moderate risk strategies





                It is important to note that the average Beta of the POM Planning conservative strategies is less than .30 and .40 for the moderate risk strategies. To learn about these investment strategies, click on the following link:

                Do you think the many advisors who are licensed IARs under the big IMO’s RIA platform think the investment strategies they offer are good? If they knew of the low drawdown risk platform, do you think their opinion would change? My guess is it would.

                *Click on the following link to download a summary of the annual returns and risk metrics of POM Planning's 13 tactically managed strategies: Past performance is no guarantee of future results. Investing is risky and investors can and do lose money. 

                Be careful— be very careful when you pick an RIA to work with. Most insurance agents will become IARs (independent advisory representative) under an RIA (it’s easier and cheaper). When you get your 65 licensed and become an IRA or an RIA you have a fiduciary duty to your clients when it comes to the advice you give. Picking an RIA to work with that you know has significantly underperformed other RIA platforms you could work with is not my idea of fulfilling your fiduciary duty to your clients.

                I hope this newsletter will motivate insurance agents who are not licensed to consider getting a 65 license. I hope for those who already have one, especially those working with an RIA offered by or through an IMO, will think critically about whether you are using the best platform for your clients.

                Full disclosure—I am a big supporter of a particular RIA platform ( I’ve recruited over 200 advisors to this RIA and collectively they have gathered approximately $500 million dollars in AUM over the last three years (insane growth). The POM Planning platform is a low maximum drawdown risk platform which fits perfectly with insurance agents who use don’t-go-backwards fixed products.

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