Legal and Compliance Updates

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The following information will help you stay current on your responsibilities as an Athene producer. Remember, it is your obligation to know the requirements of your Athene contract, as well as the laws and regulations of any state in which you conduct business.

All states:
Athene’s position on providing investment advice 

Athene reminds producers in all states that state insurance and securities regulators continue to be concerned that insurance producers are dispensing investment advice without the required securities registration/licensure. There are several circumstances under which regulators may conclude under state law that a producer is providing investment advice, including:

  • A producer recommends the liquidation of a security (for example, to provide a source of funds for the purchase of an annuity product).
  • A producer advises a customer of the relative advantages and disadvantages of investing in securities as directly compared to a fixed or fixed indexed annuity product.

Montana*
The Montana Legislature recently amended MT ST 33-20-805, Duties of insurers and producers – best interest obligation, which includes a key variation from the Suitability in Annuity Transactions Model Regulation (“Model Act”) producers may already be familiar with. The recently amended statute provides clarity about how Montana may approach the line between providing insurance advice and securities advice. The amended statute describes several prohibited activities for an insurance-only producer, including the following:

  • Discussing risks specific to a consumer’s individual securities holdings.
  • Providing advice regarding a consumer’s specific securities or securities investment performance.
  • Comparing a consumer’s securities or securities investment performance with recommended annuity products.
  • Recommending the liquidation of specific securities or identifying specific securities that could be used to fund the purchase of a recommended annuity product.
  • Recommending specific allocation between insurance and annuity products.
  • Offering research, analysis or a recommendation to a consumer regarding specific securities.
Providing advice or services or acting in any way that is otherwise subject to securities laws requiring other professional licenses.

*All producers should understand that Montana is not the only state in which insurance and/or securities regulators are monitoring the distinction between investment advice and insurance-only licensed producer activity. Be sure to stay up to date with the rules and regulations of the states you do business in.

 

Additional guidance for all states

Athene provides guidance on investment advice in its product training. Individuals who are insurance licensed may only discuss:

  • The stock market and indices in general.
  • Market risks, recent or historic economic activities, or market indices that are generally known to the public and regularly discussed in media.
  • Suitability information required by the Suitability in Annuity Transactions Model Regulation.

Athene’s position on providing investment advice is contained in the Doing Business with Athene Producer Guide. Producers who are not licensed to discuss securities or provide investment advice are prohibited from the following activities: 

  • A producer must not provide specific advice about, or recommend, the liquidation or “replacement” of a security.
  • A producer must not recommend a specific allocation among investment classes.
  • A producer must not discuss the characteristics, advantages, and disadvantages of a particular security.
  • A producer must not discuss the details of alternative indices and how they work.
  • A producer must not advise a customer as to whether securities are relatively more or less suitable than a fixed insurance product.

Should you encounter a situation in which a client owns a security product that may be used to fund an Athene annuity product, please consider taking the following actions:

  • Obtain a clear acknowledgement from the customer that any decision they make to liquidate securities to provide some or all the funds for the purchase of an insurance product is the customer’s independent decision and choice, and not the result of any specific recommendation on your part.
  • Be clear with customers that if they require investment advice, they should seek the advice of a properly licensed securities professional in conjunction with the liquidation of any securities.
  • Consider using a disclosure form that clearly reinforces what service you do and do not provide.
  • Clearly indicate the services you are, and are not, licensed to provide to the customer without using phrases that may lead the customer to believe otherwise.

The Montana legislature recently amended its view to include a key variation from the Suitability in Annuity Transactions Model Regulation (“Model Act”) producers may already be familiar with.

Please make sure you read all updates in their entirety. Failure to comply with applicable regulations may lead to disciplinary action and may be grounds for termination of your appointment and/or contract with Athene.