July 29, 2008
Being securities licensed as well as insurance licensed, and marketing securities, variable products and fixed/indexed products, this new regulation to have an indexed annuity be classified as a securities product does not make sense to me. Federal District courts have recently ruled that indexed annuities are not in fact securities products and it seems to me to make this new rule take effect, index annuities would have to be excluded from the definition of annuities. The real problem is not the design, it is obviously fixed in nature by contractual guarantees. More so are uninformed agents or ones who don't play by the rules. Punishing everyone else because of a few hardly makes sense. In fact, more regulation, (oversight by the SEC) does not solve the problem, I have not seen it solve issues with other regulated products such as mutual funds. Perhaps more education even disclosure forms would help, but making it a securities product, which it clearly is not, and then forcing reps to obtain a securities license, does not mean anything more except more reps getting securities licensed. How does that stop someone who is not truthful or does not disclose everything from continuing? It doesn't There are many fine insurance only reps who provide valuable products and services to their clients with insurance based products, those with minimum contractual guarantees. There is a need for this service and these products and again I do not think it is fair to punish these individuals, most of which do a fine job educating and disclosing to their clients. But the reality is, a fixed indexed annuity is not a securities product. On top of that, local (state insurance departments) in my opinion, have a much better grasp and handle on regulating fixed insurance products, with far more experience in insurance, then the SEC.
Thank you for listening