State Farm Insurance is getting its agents out of the financial advisory game.
Starting in April, about 12,000 agents who are licensed to sell mutual funds and other retirement investment products will no longer do so.
The agents will also lose access to the commission revenue from those sales. This affects about two thirds of the entire 18.000 agent force for State Farm.
The Bloomington-based company will use a call center instead for mutual funds.
State Farm had more than 11 billion dollars in company mutual funds under agent management last year.
New federal rules take effect in April requiring sales forces offering securities to act "in the best interest of the customers." The former standard was a prohibition on selling products "unsuitable" for clients.
The new Department of Labor standard has implications across the brokerage industry, and not just for insurance firms with sidelines in retirement investments. Many investment firms are beefing up documentation and reporting requirements and urging brokers to move toward fee based accounts instead of commissioned sales.
State Farm agents will continue to sell fixed annuities and life insurance. A company statement indicates State Farm feels the decision strikes the right balance between serving customers and adhering to the Department of Labor rule.
