November 16, 2008
As a member of NAFA and as a registered investment advisor, I OPPOSE THIS PROPOSED RULE.
Indexed Annuities have no risk and there is never a loss of principal. If the SEC feels compelled to write more regulations, they should spend their time on stocks, mutual funds and variable annuities. Oh…and don’t forget Unit Investment Trusts, High Yield Bonds and Hedge Funds.
This is where unsuspecting and uneducated people are losing their life savings in this market crash. Indexed Annuities are safe.
This is exactly why people hate the federal government.
The proposal is not supported by any empirical evidence that supports the Commissions claim that widespread abuses in selling the product exist. The Commission cites its concern over improper sales practices as the primary basis for proposing Rule 151A. Yet, the Commission provides no study, research findings or statistical information to demonstrate or suggest that the abuses are endemic or pervasive. 41 states have adopted the NAIC Suitability Model and the NAIC reports that .1% of all complaints filed with state insurance departments relate to fixed indexed annuities. Members of the fixed indexed annuity industry, insurance industry groups such as the ACLI, NAIFA, NAILBA and IMSA, and insurance regulators deplore fraudulent, misleading or abusive sales practices.
The Commission’s action would restrict public access to an increasingly popular product. Many independent insurance agents such as you have indicated that they would not make fixed indexed annuities available to their consumers if the annuities were registered as securities particularly because many such independent insurance agents do not desire to become registered representatives associated with broker-dealers due to the cost and administrative burden relative to requirements that are inapplicable to the business of insurance.
The result of agents deciding not to offer this valuable product would naturally limit public access to the product. Such a result is harmful to the public because it restricts the availability of a product which provides the opportunity for greater potential interest while also providing principal and minimum interest guarantees.
The appeal of indexed annuities is that they are not securities and not subject to risk of loss from market activity. Give examples of your customers purchasing fixed indexed annuities to protect their savings from market losses.
Fixed indexed annuities are currently subject to comprehensive state insurance regulation. Emphasize that you take your responsibility as a financial professional very seriously and not that your sales activities are subject to extensive state regulation.
Thank you for taking to time to protect your clients right to purchase fixed annuities. It is critical that you speak out on the proposed rule which will severely limit availability of a guaranteed insurance product that helps to provide economic security during a time of significant economic turmoil.
Peter Wechsler
Life Insurance Licensed
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Peter R. Wechsler
Investment Advisor Representative
Franklin Retirement Solutions