August 31, 2008
RE: Opposition of proposed rule 151A.
The public comment period should be extended far beyond the 9/10/08 date currently published. This will allow for adequate analysis of the proposed rule and appropriate comment on this issue. This proposed rule has sweeping consequencies to the public as well as the industry as a whole.
Indexed annuities are fixed annuities that guarantee a minimum interest crediting rate. Clients are NOT investing in the market, they simply have contractural policies with an insurance company. The policy owner is not taking ANY risk in the market.
The design and sale of annuities is highly regulated by state insurance departments and have required suitability disclosures. Also, guaranteed minimum values are regulated through the Standard Nonforfeiture Law.
Most insurance companies already conduct suitability reviews of all sales in all states. Suitability reviews required of brokers under FINRA rules would not add any protections over and above what is already being done.
My clients are extremely happy and appreciative of owning a fixed index annuity, especially now the economy has dramatically declined. They see their friends and family with current losses of about 20% and remember the 2000-2002 recession. Most of my FIA clients were not credited with earnings this year, however they did not have ANY loss either.
This is in stark contrast to loss of interest and principal experiences by broker clients. Frankly, if the SEC wants to investigate something, take a look at the multi millions in loses for senior citizens who acted on the advise of their brokers. This is the real crime, not a few bad advisors in the fixed annuity business.
It appears evident that broker/dealers want all the business and are going after the comparatively small amount of fixed indexed annuities sales. Greed in its purest form.
FIA's are, in fact, insurance products that PROTECT policy owners from risk and potential financial disaster.