November 19, 2008
I strongly disagree with the proposed changes as this will adversely affect the security of millions of Americans.
Research shows that securities brokers sell far more Variable Annuities (VAs) than Indexed Annuities (IAs). Limiting IA sales to brokers will ensure many seniors are inappropriately placed into more volatile VAs, risking the retirement and futures of retirees. Several studies have shown that brokers overstate the risk tolerance of clients, and take more risk with their clients than the clients would take on their own.
The recent financial chaos demonstrates that brokers and FINRA are incapable of monitoring these additional products since they can't handle what they have. Stop and think that TRILLIONS of dollars in value have been lost by the securities industry. This is unconscionable.
While the insurance industry hasn't been perfect, there is not one senior who has lost money in an IA, unless they canceled the policy early. One report shows that there are relatively few complaints regarding the sale of IAs. A hand full of bad sales practices compared to millions of contracts sold. Compared with FINRA and the brokerage industry, this is stellar performance.
Having a competitive alternative to the brokerage industry is an invaluable protection for seniors. Don't let the brokerage industry ruin IAs. They will confiscate them, then ignore IAs while they shift marketing efforts to VAs. They will enlist millions of Seniors into the riskier and more profitable VAs. Why else does the brokerage industry sell so many VAs compared to IAs if not for profit?
I am proud that the 3% guarantee (and now 7%) has protected my clients from the 40% losses at the hands of their brokers. I suggest the mass exodus from brokers into safer IAs, and the subsequent loss of revenue is the motive behind the securities industry's lobby to take over of IAs from the insurance industry. A dirty business indeed.
States should remain the sole regulators, focusing their effort on client education of suitability and the costs of early termination of IAs. Compared to the regulation of the securities industry, the current system of oversight of IAs by the States is working quite well. Please don't screw it up.