The Kentucky Department of Insurance is reminding insurance agents to be careful when advising clients on securities transactions.
State law requires that investment advisors be registered with the state. And when an insurance agent advises a consumer to “sell, surrender, roll over, or otherwise liquidate a securities product (e.g., 401(k) plans, IRAs, mutual funds, and brokerage accounts) in favor of an insurance or annuity product, and is compensated in connection with that advice, the agent may be acting” as an investment advisor, the department said in a bulletin this month.
In such cases, the agent may be subject to registration and compliance with the Securities Act of Kentucky.
Unless registered as an investment advisor, agents should avoid:
- Recommending the liquidation or transfer of securities to purchase insurance or annuity products, especially when profiting from that advice.
- Providing opinions or forecasts about securities or comparative performance between securities and insurance products that could be interpreted as investment advice.
The DOI did not say what prompted the reminder, or if the DOI has received complaints from consumers. Questions may be directed to the Department of Financial Institutions at KFI@ky.gov.
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