September 9, 2008
-I strongly oppose ruling 151-A.
A lot of attention has been brought to unscrupulous sales practices and complexity of Fixed Indexed Annuity products. Although I feel that this represents a very small minority, the Insurance Companies and State Insurance Departments have made great strides in improving these problems over the past 3 yrs. I applaud the efforts of making or industry better, but this is not criteria to judge whether the SEC should have jurisdiction over the product. Being registered as a security is not going to eliminate complaints, there are twice as many complaints filed by variable annuity owners annually.
What will happen if they become a registered product is tremendous economic strain. Broker dealers will not be prepared to distribute and promote the sales of these products (registered or not), many Insurance Companies will suffer which will cost thousands of jobs and ultimately hurt Stockholders. The existing experienced distribution system of these products will be all but eliminated, also costing thousands of jobs. Insurance Agents, Financial Planners and others who refuse to sell products/investments that the consumer can lose value in will be forced to sell traditional fixed rate annuities that do not provide near the value of an indexed annuity in this anemic interest rate environment. Ultimately the one that suffers most is the consumer.