Independent advisors break taboo in the name of fiduciary standard

by Will Ashworth26 Oct 2015
Shh! It may still be a secret, but an increasing number of independent advisors are now prepared to recommend a “competitor’s product” in order to live up to their own brand of fiduciary standard.
A little-known fact but dual-licensed advisors across the country working under the platform of one insurance company are recommending products manufactured by another and while this provides independent advisors with the ability to best serve their clients it does create  some friction between the companies.
“I am independent in the meaning that I can buy anything from anybody. In terms of insurance I can buy products from any insurance company,” said an Ontario advisor anonymously. “But my clients must sign a piece of paper in which I disclose that I have outside business activities because dealing with other insurance companies which are not the platform company is considered an outside business activity.”
“That’s not well known and well understood,” said the Ontario advisor.
While it might seem odd that one insurance company would provide a business platform for an advisor to recommend products from another, it seems even stranger that since they do allow it, that they make those advisors jump through hoops making it as difficult as possible to operate their businesses in the most professional manner possible.
For example, if someone works for Sun Life or Manulife as a captive agent they are an employee of that insurance company and must sell the products of their employer. But under the independent model they can sell whatever they want. 
“If you set yourself up through a different agency such as Insuremax, which works through Hub Financial,” said the advisor while discussing with LHP how to become independent. “You have access to all the insurance companies.”
With the discussion revolving around the fiduciary standard taking centre stage it’s become crucially important that advisors put their clients’ best interests before their own. The captive model doesn’t allow for this; the independent advisor model does – but not without the occasional nose getting out of joint at the big insurance carriers.
“It speaks to the independence of independents,” said the advisor.


  • by 2015-10-26 1:15:52 PM

    This article doesn't seem accurate. Manulife doesn't have captive agents. Please detail where this information was obtained.

  • by 2015-10-26 3:28:43 PM

    LHP is, of course, referring to: Sunlife (formerly Clarica/Mutual Life of Canada) agents, London Life and Investors Group.

    At one time, placing coverage 'outside' of your captive company could potentially be cause for dismissal.

    When faced with providing an inferior product or providing the best product for your client; what do you do?
    My decision was simple; the client was referred to an independent. - Then in 1998, I became an independent life broker.

    Correct. Manulife Financial does not have captive agents.
    However, I believe ... Manulife Securities Inc. a wholly-owned subsidiary of Manulife Financial ...does.

    Ken MacCoy, CHS

  • by Independant Advisor 2015-10-27 12:26:52 AM

    Manulife Securities Inc. advisors are completely independent from Manulife product. They can offer Manulife mutual funds or insurance, but are not required to in any way shape or form.