November 17, 2008
I oppose this proposed ruling for several reasons.
I've been a financial advisor in Miami, Fl. for over 27 years. I'm a member of Miami NAIFA, and I've helped hundreds of clients with their planning needs.
The SEC has done such a superb job of regulating Wall Street (where risk has always existed) that we're now in a serious financial crises that could last years and break the banks of millions of citizens. Where have the regulators been while brokerage houses and money managers were allowed to make fees and commissions from account balances that have continued to free fall, in many cases jeopardizing the retirement dreams of good Americans?
Now you want to regulate a product that is already safe, has no risk of losing principal and acquired gains, and lets people sleep at night. There's nothing to regulate! Indexed annuities credit interest like a bank does, simply by following the performance of the whole market as represented by an stock index. State regulators were invented to handle the insurance industry and it's challenges. They do an excellent job. Yes, there are abuses in selling certain products, but they represent a tiny percentage of the advisor population that focus on the needs of their clients and do their best to help them reach their financial goals.
Why do brokerage houses want to supervise the sale of indexed annuities? Because billions of dollars have been placed in these safe instruments, and they want their commission. As always, it's the money. Their fees are dwindling, so they want to use their influence over the SEC to bring more money into the firm. And the people see this...it's transparent.
The appeal of indexed annuities is that they are not securities and not subject to risk of loss from market activity. Two years ago I placed two school teachers (husband and wife) in IRA rollover accounts using indexed annuities. They still have every dime of their $220,000 principal plus gains. Many of their friends are crying about 30% losses in their mutual funds. But my two clients are ecstatic, as you would be too.
Again, I strongly oppose this Rule 151A. It does not make sense, and would severely restrict public access to the safety and profitability of indexed annuities.
So let the states regulate EIAs, FIAs, indexed annuities. It's their job, not your job.
Sincerely, Steve Hennessy
Steven P. Hennessy
Trinity Financial Services