August 27, 2008
Dear Sir or Madam,
This is in regard to the proposed Rule 151A regarding the licensing of agents selling indexed annuities. I strongly SUPPORT the adoption of this rule requiring agents to be Series 6 or 7 licensed before selling indexed annuities. It has been argued that because of the guarantees, the risk of a downturn in the market lies with the company and not the investor. But variable annuities have living benefits with guarantees to protect the investor and they are highly regulated. Even with the guarantees, there are many moving parts and many complexities with variable annuities...hence the recent advent of additional compliance regulations regarding suitability and disclosure. Equity indexed annuities also have many moving parts and are also very complex and should likewise be regulated. But the big issue that opponents keep overlooking is that indexed annuities, like variable annuities, and mutual funds deal with the stock and bond markets.
Regulators have consistently seen it to be in the investing public's best interest that sales people be trained and knowledgeable regarding the markets, retirement planning, how the various products work, and what their clients investment options are. Without requiring a uniform standard of licensing and knowledge for all sales representatives selling mutual funds and annuities, regardless of what they are called or what their guarantees are, an inferior level of service and worse outcomes for investors will result. In the final analysis, if you look at the costs and the benefits and whether more benefit or more harm will come from enacting this proposal, it appears that far and away the American public will be better protected, better served, and benefit from the enactment of Rule 151A.
Sincerely,
Howard Friedman
Howard Friedman, CLU