November 13, 2008
Hello.
I have been a licensed insurance agent and Series 7 stockbroker since 1984. I have had my CFP designation since 1989. I've been a member of FPA since 1989. I manage about 50 million dollars in assets.
I want the SEC to regulate and oversee the selling of Equity-Indexed Annuities. The sales practices and misrepresentations regarding these products have been astounding, especially when being sold to Seniors!
The Insurance Industry is aggressively lobbying against this regulatory oversight because the profits from these EIAs are huge (at the expense of the investor's liquidity).
The insurance industry is largely an honorable and respectable part of our economy and society. However, like all industries, it is vulnerable to the temptation to sacrifice the needs of the client on the altar of greed. (Lord knows the Securities and Banking business have struggled with that one, lately!)
Sure, right now, even the most onerous EIA looks good compared to the S & P 500. However, the owners of these annuities are probably still locked-in to many years of surrender charges.
Most of the agents selling EIAs have nothing else to offer except traditional fixed annuities which are difficult to misrepresent. I've met several Seniors who complained that they were transferred from fixed annuities (usually with surrender penalties) into these "stock market upside with no downside!!!" vehicles. NONE OF THEM COULD TELL ME HOW THE DAMNED THINGS WORK! If nothing else, the regulation would force these agents to make an attempt at full-disclosure, instead of just saying "sign here"!
Nope! Even with this terrible bear market going on, I wouldn't be "caught dead" putting my clients' investment dollars into one of these things.
Let the SEC clean-up this part of the Insurance Industry that has strayed onto the securities "court".
Sincerely,
Russell E. Hall