July 14, 2008
I am a financial planner and investment advisor and have been for some 24 years. I have found Equity Index Annuities to be a good compliment to a porfolio especially for clients at or nearing retirement.
These products (if using the good ones) have no market risk and guarantee a minimum return, in many cases 3% a year compounded. My experience in the 11 to 12 years that I have used them.... has been very good for the client. Considering the enormous risk in the mutual fund and stock area at over the last 10 years, I see no reason to make this product a security.
They eliminate market risk and allow investors to participate in an fixed investment that can potentially increase their returns above the usual CD or fixed rate annuity level. As long as the insurance industry regulates how they are sold and keeps the individual index annuities from being to commission oriented (I suggest none above 7%) I believe no SEC regulation is necessary. The ones I use pay between 2-5% commission and have no ongoing fees and all the money goes to work for the client immediately. If you make this a security you will take away the opportunity for people to be exposed to a very good investment tool.