September 9, 2008
FINRA (NASD) should be careful what they wish for, with their influence on the SEC over the regulation of Fixed Indexed Annuities, for if it comes to fruition, all that they did, was make it easier for a now securities licensed insurance agent to move the money from other so called securities to the safety of the fixed indexed annuity.
I find it interesting that while the indexed annuity has been around since 1994 there were no complaints from the so called securities industry about indexed annuities during the 1990s when the stock market was posting record gains. Now that so many consumers have found the safety of indexed annuities, and the advantage of never losing their gains, Wall Street wants them under their control.
As licensed insurance agents, we are already very heavily regulated, and educated by the State Insurance departments, the National Association of Insurance Commissioners (NAIC), and the Insurance companies that we do business with. We meet ongoing stringent continuing education requirements, and have required Suitability and Disclosure forms that are reviewed and signed by the customer, without which the companies will not issue an annuity.
Any Insurance carrier worth its salt is a member of and follows the guidelines of the Insurance Marketplace Standards Association, (IMSA). I recommend that you visit their website at http://www.imsaethics.org/ where you will see "IMSA is a nonprofit, independent organization created to strengthen consumer trust and confidence in the marketplace for individually sold life insurance, long-term care insurance and annuities. IMSA-qualified companies commit to maintaining high ethical standards and to being fair, honest, and open in the way they advertise, sell and service their products."
My clients are grateful that they will never ever lose a single cent of the money that they placed in a fixed indexed annuity. I have never seen a case of buyers remorse. Best of all, when the stock market suffers a big down turn, (or as brokers prefer to down play it, "a market correction") my phone is silent, because my clients know that they never lost a cent.
The SEC would be doing a far greater public service protecting senior citizens from losing their life savings in the stock market, where their principal is not even protected. I see far too much of it. An investor in an Indexed Annuity will never lose their principal, and in fact will have a guaranteed gain, and a guaranteed lifetime income.
If FINRA members are losing that much income due to the safety of Indexed Annuities, then I invite them to get their insurance license, and also enjoy the peace of mind, and good nights sleep that comes with selling them, as well as buying them. We have not cornered the market on insurance licenses, we would welcome them.