The true meaning of Million Dollar Round Table (MDRT)

dollars mdrtVery often insurance agents and financial advisers would state in their name cards that they are members of the MDRT. You can also see it in the newspaper when photographs of MDRT members are splashed in full page. So what is MDRT? Are they millionaires?

Quoting from the website HERE:

Founded in 1927, the Million Dollar Round Table (MDRT), The Premier Association of Financial Professionals®, is a global, independent association of more than 43,000 of the world's leading life insurance and financial services professionals from more than 500 companies in 67 countries. MDRT members demonstrate exceptional professional knowledge, strict ethical conduct and outstanding client service. MDRT membership is recognized internationally as the standard of excellence in the life insurance and financial services business.

As it can be seen from the above, that members of MDRT demonstrate exceptional (1) professional knowledge (2) strict ethical conduct (3) outstanding client service.

So how does a financial adviser qualify to be member of the MDRT? A check at this page HERE shows that there are altogether 14 pages of requirements. However, the entire 14 pages are details on how to calculate the production (sales) requirements either in first year commissions or first year premiums. For example for year 2016, the qualifying commissions that a Singapore adviser must earn in order to be a member of the MDRT should be at least S$128,500 to qualify for the MDRT. A least 50% of this must come from products’ first year commissions. Note that many life insurance products pay commissions over a few years. The fact that only a minimum of 50% must come from first year commission means a fee-only adviser will never qualify for MDRT!

The qualifying commissions are even higher for Court of the Table (COT) and Top of the Table (TOT).

So what about the part on “strict ethical conduct” and “outstanding client service”? It appears to me that these are “outsource” to other parties. For example, Singapore MDRT members must also be a member of Association of Financial Advisers of Singapore (AFAS), Financial Planning Association of Singapore (FPAS) or Insurance & Financial Practitioners Singapore (IFPAS). I guess the assumption is that these associations would verify the ethical conduct and client servicing quality. However, as far as I know, neither AFAS, FPAS nor IFPAS conduct regular mandatory audit on its members’ real life client cases to verify its members ethical conduct and competence (which is part and parcel of excellent client services).

In other words, membership into MDRT is purely based on your sales!

Although the MDRT has been well recognized by many financial practitioners as a measurement of their success, the organization must transform itself for the future. For instance, the focus on first year commission in its calculation of production eligibility encourages aspiring candidates to focus on short-term sales rather than long-term relationships. It also places too much emphasis on sales with little emphasis on ethical conduct and competence. Relying on outside associations which do not conduct mandatory audit on its members defeats the purpose of MDRT members demonstrating exceptional strict ethical conduct and outstanding client services.

These days, being a member of the MDRT is synonymous as having achieved a certain level of income. Those who claimed to be a member of the MDRT are indirectly saying to their customers and peers the kind of income they are earning. Frankly speaking, I find this quite tasteless. Professionals like medical practitioners, lawyers, accountants and engineers do not tell others about their income although it is a common knowledge that many of these professionals are extremely wealthy. Moreover, humility is a virtue which should be embraced. Why financial advisers focus so much in becoming member of the MDRT, COT or TOT? It is because the job of a financial adviser is ultimately a sales job. A successful salesman is strictly measured by the amount of sales he brings in to his company and ultimately the income he earns. Nevermind whether he is competent or ethical.

Someone joked with me that financial advisers are in the business of helping to plan for financial independence - not the client’s financial independence but the adviser’s own financial independence.

If you are a financial adviser, may I invite you to subscribe to my newsletter on how to be an ethical financial adviser: HERE .

Update 15 January 2016: This article was updated to the most recent MDRT figures and requirements.

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  1. Elizabeth says

    This was actually the very thing I was looking for, as I noticed this membership referenced in the “professional” tab of my financial advisor’s web site (an advisor I did not select; he was just “given” my accounts to manage, somehow). I already had a gut sense about his motivations behind advice he had given me that seemed certain to line his pocket on a quarterly basis, but in doing so, completely eat up any modest dividends I made in a year’s time. This seemed particularly self-interested, considering that in our introductory meeting he learned I am a single parent on a fixed income. I’ve been around long enough to look beneath the gloss and finesse; so googling to term “million dollar round table great salesman or advisor?” brought me to your enlightening information, and I am glad to have found it. Thank you for this post.

  2. xyz says

    MDRT has already long ago been seen as “sales driven” at best and “unethical” at worst in developed countries. Hence many financial salesmen / women in US, UK, Oz, Canada etc no longer bother to apply for or to display MDRT / COT / TOT.

    It is only in 3rd world countries or countries with 3rd world mentality like Singapore that continues to glorify MDRT and to take advantage of ordinary consumers’ ignorance that MDRT is prove of the financial salesman competence in providing best products & advice (which is absolutely not true). In fact MDRT proves the salesman / women competence in selling — pure & simple — whether it’s good for customer or not is not important.

    In order to meet the MDRT requirements, salesmen / women must sell products with the highest commissions, and those flavour-of-the-month products with extra commissions that companies are trying to push their salesmen / women to sell. These types of products with high commissions are 100% not favourable to customers.

  3. RWJ says

    I am a multi year MDRT qualifier. The partners I work for are COT and TOT. And guess what, we are 80% fee based! So, the assumption that you have to make big sales that benefit the advisor over the client is a load of BS. Now, there are many that do qualify on large commission based sales. But rarely will you find that they qualify year after year. One of the partner’s I work for has been COT for 38 years… It is nearly impossible to achieve that if you don’t hold your practice to a strict code of ethics and clients needs above your own….

    My suggestion, look for an advisor who has continuously achieved MDRT (especially with the same firm).

    Also, FINRA, insurance commissioners and Broker dealers conduct audits on independent firms. Any fraudulent/unethical activity, is made public knowledge. You will be dropped from MDRT if your practice has engaged in unethical activity. That’s why MDRT does t have its own “Ethics” department.

What do you think? Leave a comment.