November 14, 2008
I strongly support the proposal to require that those selling indexed annuities be securities licensed.
I am a Certified Financial Planner and a member of the Financial Planning Association. I have been a registered representative (series 7) since 1976. I have been a licensed insurance agent since 1977. I have encountered many people who own indexed annuities who have been provided with erroneous or misleading information by their agents. I am not surprised by this because I attended a meeting for insurance agents a couple of years ago where they were being taught how the indexed annuity works and how it should be sold. I was appalled by the lack of understanding of the concept and the product on the part of the agents and the presenter as well. It’s no wonder consumers are confused. The people selling these products often don’t understand the indexed annuities themselves.
As a member of the baby boom generation, I recently received an invitation from an insurance agent inviting me to attend a dinner meeting at a very nice local restaurant. I’m sure he didn’t know that I’m a Certified Financial Planner or I wouldn’t have been invited. In his invitation he promised to show me how to earn a guaranteed return of 13% in one year. Undoubtedly, this is a misleading pitch for an indexed annuity. I wonder how many people fell for it.
I am confident that the widespread abuses in the sale of indexed annuities would be sharply reduced if the people selling them were required to be securities licensed. That would insure that they would have a better understanding of what they were selling. Many of these agents simply don’t know what they are doing. Worse yet, many of them do understand what they’re selling and they employ dishonest sales methods that would not be allowed if they were licensed as securities brokers.
Robert Chamberlain, CFP