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Karen Tyler

ND Securities Department
600 East Boulevard Avenue
State Capitol, 5th Floor
Bismarck, ND 58505-0510
Phone: (701)-328-2910
Toll Free: (800)-297-5124
Fax: (701)-328-2946
Grafton Office
701 W 6th Street, #312
Grafton, ND 58237
Phone: 701-352-4592

Unlicensed Salesmen Giving Liquidation Recommendations

As in years past, the liquidation of securities by insurance-licensed firms or agents who are not registered to sell securities is a significant source of complaints and inquiries for the states.  Fifteen states pursued actions against insurance companies or agents in 2011, with the most common issue being liquidation of traditional securities holdings to fund annuity purchases.  Senior investors are often enticed to shift their investments from traditional securities to annuities sold with the promise of guaranteed income and a mechanism for easy transfer of the value of the annuity to beneficiaries upon death.  While annuities may be appropriate retirement products for some, they are not suitable for all investors and the liquidation of securities holdings is not always the best approach to funding an annuity purchase. 

Insurance agents who are not also licensed securities professionals do not have the training and expertise necessary to determine the suitability of liquidating securities products to fund the purchase of an insurance product, and cannot legally provide this advice.   A specific license is required before anyone can recommend the purchase or sale of securities.  Being licensed as an insurance agent is not a substitute for a securities license.   Investors should require proof that a salesperson is licensed to make a recommendation to sell securities before agreeing to any transaction involving securities.