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Form ADV Part 1A Item 6A(6) · Answer type: yn · Item 6 - Other Business Activities
Item 6A(6) asks whether the investment advisory firm itself is actively engaged as an insurance broker or agent: meaning the same legal entity that provides investment advice also sells insurance products, typically earning commissions on insurance sales.
An insurance broker or agent sells various insurance products such as life insurance, disability insurance, long-term care insurance, annuities, or property and casualty insurance. When an investment adviser also operates as an insurance broker or agent, they can earn both advisory fees for investment management and commissions from insurance product sales.
This dual business model creates potential conflicts because the firm might have incentives to recommend insurance products that generate higher commissions rather than focusing solely on what best meets the client's insurance and investment needs. They might also favor insurance companies that offer better sales incentives, override commissions, or marketing support.
A firm that both manages investment portfolios for advisory fees and also sells life insurance, annuities, or other insurance products for commissions would mark Yes. A firm that only provides investment advisory services without selling any insurance products would mark No.
Yes
The adviser operates as both an investment adviser and insurance broker/agent, earning compensation from both advisory services and insurance product sales. This requires disclosure of potential conflicts and careful management of competing incentives between advisory duties and insurance sales objectives.
No
The firm operates only as an investment adviser and does not engage in insurance sales activities. However, they may have affiliated insurance companies or agencies (which would appear in Item 7A(12)) or work with third-party insurance professionals for client insurance needs.
6A(6) - Insurance broker or agent (Yes / No).
This checkbox is part of Item 6A, which covers other business activities that the investment adviser firm engages in beyond providing pure investment advisory services.
When an adviser firm also sells insurance products, they face conflicts between their fiduciary duty to provide objective investment advice and their sales incentives to generate insurance commission revenue. A Yes answer means you should understand their insurance sales practices and potential conflicts.
The dual role can create conflicts where the firm might recommend insurance products primarily because they generate commissions, suggest more insurance coverage than necessary, favor higher-commission products over lower-cost alternatives, or integrate insurance recommendations with investment advice in ways that benefit their sales income rather than your financial goals.
A Yes does not tell you what types of insurance products the firm sells, which insurance companies they represent, how their insurance commission income compares to their advisory fees, what their insurance sales processes are, or whether they have effective policies to manage conflicts between advisory and sales functions.
Check Item 5E(5) for reported commissions and the Item 5B employee rows for insurance licenses. If the firm recommends insurance, request the product illustration, commission disclosure, and any separate insurance agreement.
Yes
The firm reports acting as an insurance broker or agent. On the firm's Best Investors ADV panel, review their Item 5E compensation structure to understand both advisory fees and commission-based income sources. Check 5B(5) to see how many employees are licensed insurance agents, which indicates the scale of their insurance sales activities.
Also review 7A(12) to see if they have affiliated insurance companies, and examine any Item 8 disclosures about product recommendations. Ask the firm directly about their specific insurance products, commission structures, and policies for managing conflicts between advisory and insurance functions.
No
The firm does not report insurance broker or agent activities. However, check 7A(12) to see if they have affiliated insurance companies or agencies, and review 5B(5) to see if individual employees are licensed with insurance companies, which could still create conflicts even if the firm itself doesn't sell insurance.
Look at their 5E compensation structure to confirm their revenue comes primarily from advisory fees rather than product sales commissions.