August 27, 2008
I believe the Proposed Section 151A Rule is unnecessary.
I sell indexed annuities, and even though I am securities licensed with a Series 6, 7, 24, 63 65, I don't believe that the indexed annuity meets the definition of a security. All indexed annuities that I have sold have had a principal guarantee provision backed up by the insurance company issuing the policy. At the end of the day, these products are insurance products, not securities.
My clients buy them, because they like to participate in the potential of the up of the market, usually based on the performance of the SP500 Index. But what they like most is the fact that if the market goes down, they won't lose their principal.
I think the Securities Industry wants to control the sale of these products, becuause they have seen a huge flow of investment funds out of variable annuities and mutual funds where the client can lose their principal. To me, this whole issue is politics--the Securities Industry against the Insurance Industry.
My favorite indexed annuity product is issued by American Investors Life, a subsidiary of AVIVA. That company requires a completed and signed client suitability form and product features and benefits client disclosure form on every sale. These forms are similiar to the ones I would complete for a variable dollar investment sale for my broker-dealer.
The insurance industry has developed a wonderful product for consumers with the advent of the indexed annuity I believe that the insurance industry is doing an adequate job of policing agent sales practicies involving these products. There is no valid reason to bring the sale of these insurance products under the jurisdiction of the SEC.
Mark Spurgeon, CLU, ChFC