Protect Your Practice: Fiduciary Acts on Behalf of Your Client
Protect your practice by ensuring any fiduciary acts you make on behalf of your clients are in accordance with the rules and requirements of your firm, insurance carriers, and regulatory authorities.
You may run into situations where a client asks you to act in a fiduciary capacity. Perhaps this situation presents itself because your client is also a close friend, or they have no family to assist them, or don’t think they have enough wealth to warrant creating an estate plan or employing professional services.
Allianz policy
As a financial professional acting on behalf of Allianz Life Insurance Company of North America (Allianz) or Allianz Life Insurance Company of New York (Allianz Life of New York) (herein collectively referred to as Allianz), you or any member of your household may not act as a fiduciary for any domestic client of Allianz, unless that client is an immediate family member.1
Acting in a fiduciary capacity exposes both you and Allianz to claims of undue influence over a client and/or conflict of interest with a client. Fiduciary acts include taking on such roles as:
- Trustee of a trust
- Attorney-in-fact under a power of attorney
- Executor
- Custodian
- Beneficiary
- Guardian
- Conservator
- Personal representative
- Administrator
- Being designated in a client’s living will to participate in health care decisions
State insurance regulations
States are in the business of protecting the public and have laws prohibiting producers from acting in these fiduciary capacities with their clients. For example, Florida’s regulation is highlighted below:
Florida insurance regulations prohibit producers and their family members from being named as a beneficiary, serving as a trustee or guardian, or accepting authority to act under a power of attorney for any person the producer conducts insurance business with unless the instance follows under an exception listed in the regulation.
FINRA regulations
FINRA approaches protecting the public through the use of FINRA Rule 2010, FINRA Rule 3241, and its member firms’ policies and procedures, which normally requires their representatives to disclose and seek approval before acting in the fiduciary roles mentioned herein. FINRA Rule 2010 requires member firms and associated persons to observe high standards of commercial honor and just and equitable principles of trade. FINRA Rule 3241 explains the obligations of the registered person when considering being named a customer’s beneficiary or holding a position of trust for a customer.
Alternatives to acting in a fiduciary capacity for your clients
To address client needs while protecting your practice, seek assistance from a corporate entity, such as a trust company or a bank trust department, an estate attorney, or others professionals who specialize in handling these fiduciary acts. Maintain a network of professionals to whom you can refer clients.
Additional information and resources
Additional information on prohibited and restricted practices can be found in Allianz Life Insurance Company of North America’s Compliance Guide. (PDF)
Related resources:
Protect your practice and your reputation by ensuring any fiduciary acts on behalf of a client are in accordance with the rules and requirements of your firm, insurance carrier, and regulatory authorities.
Please contact your Allianz representative with any questions.
1 The only exception is a person who is an appointed producer with Allianz may be designated as an attorney-in-fact with an Allianz-approved limited power of attorney instrument to facilitate the underwriting and issue of life insurance where the business is properly submitted through the Allianz High Net Worth Foreign National Program, and the producer designated as the attorney-in-fact is not involved in the solicitation or sale of the policy.
This list is not intended to represent a comprehensive list of considerations on this topic. Financial professionals are responsible for adhering to the insurance regulations where they conduct business. If you’re registered, follow the approval requirements of your broker dealer and/or registered investment adviser.
This material is designed to provide general information on the subjects covered and is not intended to provide specific legal advice. Please note that Allianz Life Insurance Company of North America and its representatives do not give legal advice. You are encouraged to seek legal counsel as necessary for your particular situation.