State governments generally have separate departments regulating securities and insurance. An article by Bruce Kelly in Investment News reminds us that when stockbrokers get tossed out of the securities industry for fraud or other sales abuses, they often keep their insurance licenses. This means that the agent selling you life insurance or annuities may be a crocodile who has been forced to relocate to a new lagoon.
How can you find out? Well, first, you can simply ask the agent if he or she sells or ever sold securities and, if so, whether his or her securities licenses are still active. But whether the answer is yes or no, you also should spend the few minutes it will take to search the FINRA BrokerCheck database. This resource will tell you whether your agent was or is a stockbroker and, more important, it will provide a complaint and disciplinary history. BrokerCheck isn’t perfect, but you still should be familiar with it. This, of course, is particularly true if you’re thinking of retaining a new stockbroker — but that’s a subject for another day.