September 5, 2008
Although I believe that some agents are using deceptive sales practices to market and sell indexed annuities, this occurs in every industry (especially the securities industry), and is not representative of the majority. I am securities licensed and I have clients that have been "robbed" by unscrupulous investment reps. Equity indexed annuities are not securities products and aid millions of people in securing their financial futures without the fear of losing hard-earned, life-long savings to the risks of the stock market and fees of mutual funds. I am a holistic planner and I help clients with fixed and equity investments. I think a mix of the two is essential and equity-indexed annuities offer a piece of that puzzle with a guaranteed rate of return over the life of the contract. Show me a stock or mutual fund that can offer that.
As for commissions. Over the term of the annuity I think a rep or agent actually will make less than that of a managed money account or mutual fund/stock portfolio, in fact far less. Actively managed accounts are averaging 1.25% per year in fees. Over a ten year period that is far more than commissions on indexed annuities. If this ruling passes, indexed annuities will probably become much like variable annuities and fee clients to a slow death.
This proposal is unfounded and should be taken off the books. It is an attack on good men and women that try to do the right things for their clients day in and day out.