I am a licensed insurance professional and variable product salesperson. I am writing to you concerning the suitability standard and principal review requirements pertaining to the sale of variable annuities contained in NASD proposed Rule 2821. Although the latest NASD proposal includes several amendments made to earlier versions of the proposal, the proposed rule's requirements are redundant, unnecessary, will provide no meaningful additional protection to consumers and will adversely impact my business. I urge the SEC to disapprove the proposal.
I firmly believe people who engage in misleading sales practices should be aggressively prosecuted and subject to appropriate sanctions. The NASD, however, has failed to adequately justify the need for the proposed rule. To the contrary, the available data does not support the NASD's claims that the level of sales problems in the variable annuity marketplace calls for the adoption of the proposed rule. Unsuitable variable annuity sales made up less than .50 percent of the NASD's disciplinary actions over the last five years, and complaints about mutual funds and individual securities far outnumber those concerning variable annuities.
If the NASD just inforces the rules currently inforce they are quite adequite. While Variable Annuities do carry greater charges than some other investment products there is good reason for these charges. Bad things can happen in the investment world, much greater than what we have seen in the last eighty years. Variable Annuuities allow people to participate in investing and at the same time insure themselves against the possibility of losing it all as in other investments.
If regulators really want to protect consumers, appropriate enforcement of the existing suitability rule rather than adopting a new rule is the answer.
In addition, the requirement for review by a principal found in the proposed rule deviates in several significant ways from the general supervision requirements found in Rule 3010. This requirement appears to present a bias against these products, and will lead to constant second guessing of my advice and recommendations (based upon less first hand information than was available to me). Additionally this just adds one more cost to our doing business This is a very bad idea and will serve no useful purpose, I urge the SEC to disapprove NASD proposed Rule 2821. Thank you for your consideration of my views on this matter.