November 15, 2008
My name is Ron Morley and I have been a licensed insurance agent since 1987. I am a member of the MDRT, or qualify to be one, a member of NAFA, and have been offering fixed indexed annuities since their inception in 1995-96. I have used the fixed indexed annuity in income laddering strategies for the last five years. I pride myself in the fact that we will not let any of our clients put all their monies in this strategy, and we are very concerned they have liquidity elsewhere in there financial portfolio.
I have been affiliated with Lincoln Financial in the past. I have never been licensed as a securities professional, however, they have a model that all their licensed representatives can use a third party marketer to provide fixed indexed annuities to their clients and receive compensation for all involved, including the OSJ's. I have often wondered why this model is not placed into effect with all broker dealers!
My clients are elated that they have received zero in their accounts in the past year. Zero is their friend, because they have not lost any value in their accounts either. Many of them are pulling monthly income off these accounts and their monthly cash flow has not lowered either.
Principle protection is of utmost concern in these days and times with my clients. And all my clients understand the company has rules for liquidity that would dip into principle if they break the rules. But because of the previous planning we did with them, their liquidity rests elsewhere and they are not about to incur previously discussed planning ideas that would diminish their principle.
Properly structured, index annuities have a tremendous ability to give a better than average interest rate over the life of the average 10 year contract. There are improper sales practices in every industry, however, for the most part, the industry weeds out those who continually abuse practices that are not consumer friendly.
We follow the NAIC Suitability model when offering these to our clients and that is compliance checked on every new application. With the complaints at the State Insurance Departments being less than .1% , I am curious as to the real concern behind such a suitable product. We all deplore abusive, fraudulent practices and those that use those practices as a model to run their business.
All my sales activities are subject to scrutiny by the insurance regulators and home office compliance departments. This is extensive regulation.
All my customers are extremely concerned about safety of their principal and elated that in this market condition they, too, are not down 40%, to below 1997 levels, but are up to the level that had been earned before this market plummeting and know they will never have less than that. They are not worrying about their principle. What a feeling to know that years ago we made a decision to offer conservative, principle protected products and today that decision, in hind sight , makes us look like financial geniuses. We are not, but to have this product only available to registered representatives would take the current market and cut it in half, as many insurance professionals do not wish to increase the costs of their operations by becoming involved with a broker dealer. Their bottom lines would put them out of business. Please do not restrict the availability of this product to the public by offering it through broker dealers only. This is not fair to the public and not fair to the insurance professionals who strive daily to offer products to their clients that have a greater opportunity for a better than average fixed interest rate to their clients.
Respectfully submitted,
Ronald D. Morley
President, The New Wealth, LLC
an authorized representative of Tarkenton Financial, LLC