The big picture on dual licenses

The ability to not only coordinate but execute both the securities and insurance facets of a plan, whether it's a financial plan, an estate plan, or even a business succession plan, should not be discounted. "Having that ability allows you to get the client moving," says Tomaneng, who manages about $33 million in assets across a practice that encompasses some 400 client households, many of which fall into the middle-market category. "Whether it's an insurance or investment product, if we can help get it done sooner and get it done right, that's good for the consumer and good for the advisor."

It's good for the advisor in that they can deliver the convenience of one-stop shopping to clients, rather than having to refer business to an outside financial or insurance professional who could conceivably wrest away more of the client's business. "When you're able to manage it all, there's far less chance of another professional sliding in and taking a piece of business from you," says Mallett. "The client has a relationship with one person whom they can trust for risk management, for managing assets—the whole picture." 

There's a proprietary mindset that comes with being dually licensed, adds Mulvihill, in which he feels, "I should be the one doing that work. Why should I cede business to someone else and expose myself to the risk that a client may take their business elsewhere? The client is going to find the answer, whether it's securities- or insurance-based. I want to be the one who provides that answer."

From the client perspective, there's also an added level of comfort and trust knowing their advisor has the licenses and the accompanying expertise to handle both areas of need. "It really frees clients from worry and gives them a sense of ownership of their future," says Nel. "They have a sense that I know what I'm talking about, which results in a wonderful level of trust and communication between us." And that trust and communication, she notes, "leads to the free flow of referrals."

Return on Investment

Becoming and remaining dually licensed does require an added level of commitment from the advisor in terms of cost, time and responsibility. On the insurance side, for example, there's the work of getting licensed in the first place, perhaps in multiple states, then of relicensing while fulfilling continuing education requirements along the way.

Maintaining a securities license (or licenses) entails a similar commitment, although, notes Tomaneng, "with insurance licensing, the responsibility [for keeping up with requirements] is more on [the individual advisor], while on the securities side, you can lean more on your broker-dealer to help manage things."

Maintaining dual licenses "is a challenge," acknowledges Nel. "But it's well worth it. It helps me to really raise the bar, to take planning to another level."

Being both insurance and securities licensed "is a differentiator, which is always good in any kind of business," observes Mallett. "Consumers are becoming more aware of things like fiduciary standards, and they're more savvy about finding advisors they trust. For people like that, having an advisor who's dually licensed matters.

"There's a credibility piece to this, too," he continues. "If you're 'just an insurance agent,' you're basically seen as a salesperson. But when you have a securities license too, that stigma disappears."

Holding dual licenses also better positions an advisor to confront some of the new consumer-oriented protections looming on the regulatory horizon—developments such as broader fiduciary standards and source-of-funding requirements that state and federal regulatory agencies seem likely to adopt to improve transparency and remove potential advisor conflicts of interests. "The handwriting is on the wall," says Mallett. "Having dual licenses really does put you in a much better position to address the coming regulatory changes."

Given distinctions in the compensation associated with securities and insurance products, being dually licensed also provides a practice with diversified income streams. "Having compensation coming from different sources and streams is important," says Tomaneng. "When you are dual-licensed, you create new revenue opportunities for yourself."

The bottom line aside, perhaps the biggest benefit to being dually licensed for stewardship-minded advisors like Mulvihill, Tomaneng and Nel is an altruistic one: "It gives me more ways to help people," says Tomaneng, "and for me, there's gratification in that."

"This business is about taking care of people and helping them reach their goals," echoes Nel. "To do those things, expertise on both sides of the equation is a must."