November 3, 2008
I want to add my few points as to why the FIXED Equity Index Annuity should remain under the jurisdiction of the National Association of Insurance Commissioners office. First all securities and/or TRUE investments have an inherent risk, at different levels, but risk of loss nonetheless. You can purchase an investment and loose part or all of your dollars e.g., IPOs are and example, penny stocks another and all those of my client's who have not made a penny on their Fidelity or Oppenheimer account since February of 2007. Per Morning Star Reports most mutual funds did not even keep up with inflation after the mid 2000 correction taking to mid-2006 for 75% of all mutual funds to recover to their pre-2000 values.
Secondly, The annual reset mechanism indicative to all Fixed Equity Index Annuities mirrors that of a CD. A CD belong to a banking institution and is not under the regs of the SEC. The saver doesn't bear any risk accept when possibly renewing to a lower market rate. The EIA in essence is a CD plus. The risk of loss is bore on the shoulders or financial integrity of the insurance company not the saver or investor, hence see above Morning Star Report. There is no risk propensity formula to calculate for a client who cannot loose a dime unless they decide, after purchasing an annuity--changing their mind and incurring a Surrender Charge, which is disclosed on the onset of the contract signing within all literature presented to the client/ annuitant. No risk propensity required just an inherent time line to liquidity or settlement. Therefore there's no requirement for prospectus or SEC intervention.
We as an industry are doing a bang up job for our client's with the EIA, ask any one who wanted to retire in 2001, 2002, 2003, 2004, 2005 and may still have had to work to 2006 to recover what they needed lost in 2000. I had an attorney client that chose not to move to an annuity at the age of 61, scheduled to retire at 62-1/2 to be with his grandkids, when he went with the advice of a Financial Advisor (Sept 1999) into mutual funds and just finally retired in January 2008 after his SEP-IRA played catchup for 6 1/2 years. No Risk, No Investment----NO SEC.
Sincerely,
Joseph John Jurkovich, Jr.
California Insurance gent Lic # 0C52178