October 13, 2008
I think it is crazy to have a fixed product be regulated by the SEC or FINRA. There has been plenty of people misselling fixed products in the past but it has never gone to securities supervision. Examples, universal life in the 80's much of them that have blown up, fixed annuities with bonuses up front but client gets low renewal rate. Index annuities like anything else has to be explained properly with easy client notices or summary. It is not a security or even close. Forget the fact of how they credit interest. They control the formula, it now allows them to credit higher interst to clients than their fixed portfolios. Either way the insurance company has control of how much they payout just as they have has for centuries, just different formulas. Same theory. Insurance company makes money, gives clients interest and they are safe. There is no downside exposure to any securites market. Stop wasting time, let the insurance companies and the states regulate. If B/D's have to regulate that is just one more hand in the for the commissions. That might deter people from selling good annuities for higher commissioned products because of the decrease in commissions. I think there is more to worry about with the economy. Try looking at regulating realtors and lenders since their business thrives on churning which is why we a re in a mess. if the SEC has a great ides on how to regulate pass it along. I think everyone involved , agents, insurance companies and the states know what is at stake and the have been taken measures to avoid any future concerns from consumers.
I think the best thing to be done is better client summarys which they initial maybe you top 5 concerns on a form. That way they can quick read short concise statements before initailing and ask appropriate questions regarding the major points.