August 6, 2008
RE: SEC Proposed Rule 151A.
As a Series 7 rep and a licensed insurance agent I would like to applaud the SEC for its numerous efforts to protect consumers from the small minority of unscrupulous agents/reps.
Insurance companies also must be recognized for their innovative products and suitability procedures, all for the benefit of, and to protect, the consumer.
My own experience suggests a large number of consumers are totally averse to the market and any security product.
Index annuities and their surrender charges protect consumers from making rash decisions and the vagaries of bear markets, while offering upside potential from market bottoms all the way up.Surrender charges do and have protected several clients from buying high and selling low, a phenomenon all to prevalent with most consumers.
I submit that Indexed annuities as currently structured and regulated play a vital role in the total offering to consumers.
An unintended consequence of this rule will be denying many consumers access to these products, simply because many Insurance agents will no longer be able to offer them. All Insurance agents are unlikely to relicense as security reps if the rule is approved.
Instead they will resort to fixed annuities and/or life insurance products.
Another unintended consequence might be the birth of another brand of fixed annuity with surrender charges equally open to abuse by unscrupulous agents/reps.
Please focus on the cause, not the symptoms. Oversight by Broker/Dealers will do little or nothing to eliminate unscrupulous marketing and sales of index annuities.
On the other hand better screening, background checks, education, and on the job training of new agents/reps, coupled with more stringent approval by state insurance departments, of unreasonably long surrender period products, will be more beneficial to the consumer.
Advise if you should require any additional information.