July 10, 2008
I have read you oratory in regards to fixed indexed annuities. I my opinion you have another agenda underlying
the one that you claim,I.E. public safety. The safety of
principal and principal guarantees that are afforded by
FIA contracts counters your claim that there is "risk" in
these contracts. These are tools designed to be used by
persons who are "risk averse". It gives the average joe
a fighting chance to receive gains close to stock market
rates, without any risk to principal.
I do not understand your statements and use of the term
"risk" in regards these products. In your report you compare FIA contracts to mutual funds, when in reality
there is NO comparison.
And we haven't even gotten into the "fees" charged by
mutual funds, bond funds, and Variable products. I recently had a client who retired early, and was "moved"
into a variable annuity by a "registered investment advisor". He was completely unaware that he had 2.65%
per year in fees, that he would continue to pay for the
life of the contract. In his case this amounted to over
22,000 dollars a year. He was told that his fees were "Low". Fia's do not charge fees generally. There may
be an occasional 50 basis point fee for a guaranteed income
rider, or long term care benefit, but the literature discloses those fees up front. All the literature that
I have seen on Variables, has made the fees ambiguous, at
best.
With all the complaints that the SEC gets in regards to
institutional investors getting preferences over the individual investor, with all of the problems like what
caused Bear-Stearns to need bailing out, doesn't the SEC
have enough on their plate right now, without going and
erroneously pointing the finger at FIAs and calling insurance agents "boogie men". Please, as the old proberb
states "take the rafter out of your own eye, and then you
will see clearly how to extract the straw from your brother's eye