FINRA-Compliant Insurance Advice: Transforming Life Insurance Evaluation for Financial Professionals

In the dynamic world of financial advising, understanding life insurance—an often-overlooked asset—can significantly enhance client outcomes and align with fiduciary duties. If you are searching for information about FINRA-compliant insurance advice, you came to the right place. This article is a summary of a webinar available on-demand entitled, "The Fiduciary Era of Life Insurance," and Steven Zeiger, a life insurance practitioner from Westchester, N.Y., is the instructor. The class offers IAR CE as well credit for CFP, CIMA, and CPA financial planning professionals. It delves into the principles and methodologies of evaluating life insurance in compliance with FINRA regulations in mind. The session highlights independent research, transparency, and ethical practices, making it an invaluable resource for CFPs, CPAs, IA reps, and other financial advisors seeking FINRA-compliant insurance advice.

The Genesis of a FINRA-Compliant Insurance Specialist

Steven Zeiger, the instructor, began his journey  two decades ago with a high-profile client whose life insurance illustrations raised critical questions. Frustrated by a lack of transparency from the insurance provider, Zeiger sought answers through independent research firms like Morningstar and companies offering Monte Carlo simulations for life insurance. This rigorous investigation led to a groundbreaking discovery: the need for life insurance evaluation methods that comply with FINRA regulations.

When Zeiger’s employer, a leading insurance company, rejected the findings on the grounds of promoting proprietary products over objective analysis, they escalated the matter to FINRA. The result? FINRA confirmed the approach as the only method compliant with its rules, albeit at the cost of the presenter’s corporate position. This pivotal moment marked the transition to a career dedicated to FINRA-compliant insurance advice, providing data-driven insights to financial advisors.

Key Takeaways for Advisors

1. The Importance of Transparency in Life Insurance Costs

The session underscores that understanding the internal costs of life insurance is crucial. Often, policies are presented with an emphasis on premiums and death benefits, while internal charges remain opaque. This lack of clarity can lead to suboptimal decisions, as clients may unknowingly choose higher-cost options that erode long-term value.

Advisors are encouraged by Zeiger to:

• Demand detailed expense breakdowns.
• Benchmark policies against industry standards.
• Ensure compliance with regulations such as FINRA Rule 2210 and the Uniform Prudent Investor Act.

2. Best Practices for FINRA-Compliant Insurance Advice

Compliance with FINRA regulations entails a commitment to full disclosure, cost justification, and suitability analysis. The session highlights:

• The necessity of comparing policies based on internal costs and performance separately.
• The value of using independent research tools to evaluate policies objectively.
• Strategies to align insurance recommendations with fiduciary obligations, including the client’s best interest regulation introduced in New York in 2022.

3. Unpacking Misleading Illustrations

Life insurance illustrations can be inherently misleading due to their complexity and lack of standardization. The session provides actionable guidance for navigating these challenges:

• Avoid relying on illustrations for policy comparisons.
• Identify discrepancies between stated and actual rates of return.
• Leverage patented research methods to uncover hidden costs and ensure accurate evaluations.

Case Studies: Real-World Applications of FINRA-Compliant Practices

The High-Cost Policy Revelation

One example detailed in the session involves two insurance companies offering similar coverage but at drastically different costs. Initial illustrations favored a lower-premium option, but independent research revealed significantly higher internal costs. Advisors learn the importance of evaluating policies holistically, saving the client millions over the policy’s lifetime.

Fiduciary Responsibility in Action

The class also examines a landmark case where fiduciaries utilized independent research to defend against a lawsuit. By demonstrating a prudent process grounded in transparent evaluation, the fiduciaries not only safeguarded their client’s interests but also uphold their regulatory responsibilities.

Ethical and Practical Implications

The class emphasizes that adopting FINRA-compliant insurance advice is not merely a regulatory requirement but also an ethical imperative. Transparency fosters trust, enhances client outcomes, and elevates the profession’s reputation. For financial advisors, mastering these practices is both a competitive advantage and a cornerstone of fiduciary excellence.

Why This Class Is Essential for Financial Professionals

This class offers a transformative perspective on life insurance evaluation. By bridging the gap between regulatory compliance and practical application, it equips advisors with tools and knowledge to:

• Navigate the complexities of life insurance products.
• Provide data-driven recommendations that align with clients’ best interests.
• Mitigate fiduciary risk through documented, transparent processes.

Who Should Attend?

• CFPs: Enhance your expertise in aligning life insurance strategies with comprehensive financial plans.
• CPAs: Gain insights into the tax implications and cost structures of life insurance.
• IA Reps: Strengthen your fiduciary practice by integrating FINRA-compliant evaluation methods.
• Trustees and Estate Planners: Ensure life insurance decisions reflect prudent investor principles.

The Future of FINRA-Compliant Insurance Advice

As the financial services industry evolves, the demand for transparency and accountability in life insurance will only increase. This class positions advisors at the forefront of this shift, empowering them to deliver superior client value while adhering to regulatory standards.

By embracing the principles of FINRA-compliant insurance advice, financial professionals can transform life insurance from a neglected asset into a cornerstone of effective planning.

Easy To Follow  

The class is not highfalutin or steeped in insurance jargon. Rather, Zeiger presents the material in an easy to follow style.  He's candid and colorful, while imparting what a a fiduciary needs to know about FINRA compliant insurance advice. Zeiger says he is not compensated by Veralytic, which is important to note. He advocates for the application because it has helped him fulfill his obligations as a fiduciary.       

About The Instructor

Steven S. Zeiger serves as a Managing Director at KB Financial and has educated legal, accounting, and financial planning practitioners of STEP, NAEPC, PLI, NYC EPC, ACTEC, the ABA, the CFA Society, FI 360/Broadridge and dozens of other groups on the application of prudent investor guidelines to life insurance product selection and portfolio management.  These guidelines are based on established and proven asset management doctrine- benchmarking, analysis of cost, performance and risk, etc.. Steven helps fiduciaries guide their clients’ insurance decisions based on the only patented prudent process for life insurance selection and retention.