November 13, 2008
Duane,
I disagree that the SEC should be overseeing a guaranteed product issued by an insurance company. The insurance regulatory industry is the problem and no amount of additional oversight from what is already an underfunded, understaffed agency is going to change that. Fixed/Indexed annuities and life insurance policies are not securities, nor even exempt securities, and at the end of the day, policyholders are still offered guarantees, which do not exist in the securities arena. I agree that there are "horrific" abusive sales tactics, but the real culprit here is the lobbying efforts of broker/dealers that are trying to bring these products under their direct supervision in order to boost revenues. If a guy just sells insurance, he should not be put in the position to need to get registered. He shouldn't be able to call himself a financial advisor, either. Broker/Dealers are one of the biggest reasons we have deceptive sales problems in the first place. I mean if that isn't the pot calling the kettle black! I am an investment advisor with strict compliance protocols managing about 200 million, and I also own an insurance agency. 27 years in this industry tells me that the problem lies with insurance carriers, and the regulatory bodies that are now in place to police them. Let's clean that up first, shall we? The SEC should be focused on real problems like reigning in the SWAP markets.
John Brotherton.
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From: Duane Thompson
Sent: Thursday, November 13, 2008 1:50 PM
To: John
Subject: FPA Regulatory Alert
TO: FPA Members
The Securities and Exchange Commission has re-opened the comment period for a rule that would allow for SEC oversight of indexed annuity sales in addition to state oversight by insurance commissioners. FPA is concerned that the insurance industry may pressure the SEC to drop the rule proposal. Several thousand emails from insurance agents opposing federal oversight have been filed, and numerous meetings by insurance industry lobbyists have been held with the Commission urging it to withdraw the rule. FPA supports the rule as a means of helping to curb abusive sales practices, particularly aggressive and misleading sales tactics targeting the elderly. FPA urges you to add your voice to the record by sending an e-mail to the SEC today supporting the Equity-Indexed Annuity Rule.
The deadline for comment is Nov. 17th, 2008. Please send your email to rule-comments@sec.gov and include "File No. S7-14-08 in the subject line. All comments are posted on the SEC website within a few days as part of the public record.
Some of the following talking points you may want to consider in your email message:
a. Identify who you are, i.e., a member of FPA and state upfront that you support the proposed rule
b. Mention your qualifications and experience in financial planning and/or as an insurance agent
c. Cite a 'horror' story involving a client who was previously sold an unsuitable equity indexed annuity
d. Cite problems with current regulation:
a. the rule is a reasonable and balanced approach to enhancing state enforcement efforts
b. the vulnerable aging population needs additional protection from aggressive sales agents
c. consumers are often mislead regarding the benefits of an indexed annuity
d. liquidity risks, surrender charges, and other suitability factors are not always clearly disclosed or understood
e. not all states have adopted suitability standards for annity sales, nor do most insurance commissioners have adequate enforcement resources available
f. some agents misrepresent themselves as offering a single retirement solution when in fact retirement planning is generally a complex planning process
Thank you for taking the time to participate in this important issue!
Duane Thompson, Managing Director, FPA
To see the original rule proposal, go to: http://www.sec.gov/rules/proposed/2008/33-8933.pdf
To review FPA's comment letter, go to: http://www.sec.gov/comments/s7-14-08/s71408-1735.pdf