October 21, 2008
Personally, someone who is handling a very complex product like an equity index annuity should be Series 7 licensed. More importantly, the people I have met who have issued these products clearly are not educated and trained to convey the information to the clients in an understandable manner. It is financially irresponsible when seeing some of the sales practices used to sell these products, especially the seniors who are the largest buyers of EIAs.
And no, this is not merely an insurance product but a fixed annuity that has part of the money used in a complex manner to replicate market exposure. It is very difficult for experienced, licensed advisors to explain it so I cannot see how it someone with no financial services training and regulation can explain it to a prospective buyer.
And ultimately, let's also disclose how much commission is paid to the advisor (I have seen some that exceed more than a 10 percent payout) and the surrender charges on some of these EIAs. That disclosure also applies to the bonuses on some of these contracts. There has to be some accountability and regulation on a product that largely has been missold and abused by untrained people.