November 17, 2008
My name is Kevin Bock. I have been working in the financial services industry for almost 2 decades. My main focus has been with Life Insurance and Fixed Annuities along with value added services of Estate Planning Coordination of all areas.
I AM OPPOSED TO 151-a
I understand that there are bad eggs in every group of people. I have been helping people in Pa. for almost 2 decades with NO complaints. My clients are overjoyed with the products that I offer that meet their needs.
I have one client who was advised to place their entire retirement plan into mutual funds in 2000...just before the market started it's drop. They HAD $650,000 to start with. They had to do a 72t plan ($48,000/yr withdrawals) because they were only age 50 at the time. Needless to say, when they met me a the end of 2006, they only had approximately $345,000 left. If they would have placed the money under their mattress, they would have had around $360,000 left. If they would have met me and placed their money into fixed annuities, including Fixed Indexed Annuities and SPIA's, they would have more than $500,000 left.
If people are taking income from variable products, their future could be in jepardy...especially if they are like the client's I've attained over the years. O% is always better than below 0% returns when taking income.
I have many clients who thank me when we talk because I was able to protect their nest egg with Guaranteed, Fixed, Indexed Annuities. If you truely understood how they work or worked in the field as I do, you would see the benefits.
NOW, as for how well the SEC and FINRA has protected the consumer agains abuse with variable products.....Variable Annuities continue to have the highest amount of complaints. I see new clients who are scraping to make ends meet because their current portfolio has lost 30% - 50% of it's value. I recently met with a new client who had to take $8000 from his LOWER VALUES to pay for the difference of what he sold his old house for and what he owed.
He was thinking about taking more money from his depressed values to pay off his new home! That would mean taking about $90,000 now instead of $50,000 1 year ago. His advisor didn't put him in a very Liquid position to handle emergencies. This is the normal from what I see every day.
When I talk to clients, they don't know what they have...and they THOUGHT they were sold safe investment vehicles.
Guaranteed, Fixed, Indexed Annuities have a place and ARE NOT something that would benefit from the appearent poor regulation and oversight that the SEC and FINRA has currently placed on the variable market place......especially with the changes the insurance industry has made in the sales practices and suitability of it's agents today.
There is NO imperical evidence that supports the Commission's claim that widespread abuses in selling the product exists. The Commission cites its concern over improper sales practices as the primary basis for proposing Rule 151A. Yet, the Commission provides no study, research findings or statistical information to demonstrate or suggest that the abuses are endemic or pervasive. 41 states have adopted the NAIC Suitability Model and the NAIC reports that .1% of all complaints filed with state insurance departments relate to fixed indexed annuities. Members of the fixed indexed annuity industry, insurance industry groups such as the ACLI, NAIFA, NAILBA and IMSA, and insurance regulators deplore fraudulent, misleading or abusive sales practices.
The Commission's action would restrict public access to an increasingly popular product. Many independent insurance agents have indicated to me that they would not make fixed indexed annuities available to their consumers if the annuities were registered as securities - particularly because many such independent insurance agents do not desire to become registered representatives associated with broker-dealers due to the cost and administrative burden relative to requirements that are inapplicable to the business of insurance. The result of agents deciding not to offer this valuable product would naturally limit public access to the product. Such a result is harmful to the public because it restricts the availability of a product which provides the opportunity for greater potential interest while also providing principal and minimum interest guarantees.
The appeal of indexed annuities is that they are not securities and not subject to risk of loss from market activity. I have given several case histories above and can provide more upon request.
Fixed indexed annuities are currently subject to comprehensive state insurance regulation. I take my responsibility as a financial professional very seriously.
It is my opinion that with the results my clients have had over the years, vs. the situations that I have seen others in that have been guided to variable products.....that Guaranteed, Fixed, Indexed Annuities have a very imortant role with many peoples retirement.... and increased regulations over the agents from an agency (SEC/FINRA) who can't police their current ranks to get complaints down, will not do anything but add costs and reduce benefits to the public.
Thank you for taking the time to review my thoughts. I love what I do and do not like the bad in this industry...but I do not feel that the SEC and FINRA can help do what the Insurance Industry has already put in place over the past year.
Respectfully,
Kevin E. Bock