July 8, 2008
The SEC must not take Fixed Indexed Annuities away from the Insurance Commissioners for the following reasons.
1. SEC is overreaching. The Insurance Commissioner is doing an excellent job. The SEC can't control the Financial Advisors and Stock Brokers now, therefore can't do as good a job as the State Insurance Commissioner is doing. How many stock brokers and financial advisors have outstanding lawsuits against them in the USA? The answer to that question is proof that the SEC is not able to police what they are now responsible for, therefore can't take on additional responsibilities.
2. The SEC does not have jurisdiction. The State Insurance Commissioners are responsible for products, Fixed Indexed Annuities, a superior product in the consumer's eyes because they do not drop in value from year to year because of recessions or bull markets. The products that the SEC controls do drop in value and don't provide guaranteed lifetime income without high, layered fees for Brokerage houses, Brokers and Financial Planners and Mutual Fund companies.
3. I will join a class action of agents to sue the SEC if the SEC persists in its plan to take over the Fixed Indexed Annuities. Fees to consumers are now low but fees will increase to consumers if the SEC takes over Fixed Indexed Annuities. Also the control exercised by the SEC is ineffective and plagued with layers of burecratic paperwok that does not add value to the consumer or properly protect the consumer. Having been licensed under SEC NASD controlled functions, I found the bureacuracy so intolerable, that I did not renew my license when it expired nor provide my clients with inferior products layered with fees for the consumer.
4. SEC whould straighten out its own house before taking on any more responsibility. Products offered to consumers by brokers and financial planners that drop in value when the economy is in recession or bull markets prevail are bad for consumers and their retirement savings. The Fixed Indexed Annuities are suitable for consumers as they now exist. There are different varieties ranging from very conservative to products that have higher rewards for the courageous retirees.
5. SEC is criticising the commissions structure because it doesn't really understand the value added by agents. I earn every penny of commission that I am paid in the service that I provide to my clients. Under SEC regulation, that level of service would not be possible to provide to the consumer because of the unnecessary paperwork, procedures and reporting that the SEC requires of regulators and insurance companies. I provide my clients with more protection and safety for their retirement savings than the SEC can ever provide.
6. The SEC contends that some agents take advantage of seniors. How outrageous a claim. How many more brokers and financial planners take advantage of seniors than agents do? The answer to that question can be answered by counting the outstanding lawsuits being brought by clients of brokers and financial planners. If there are some agents taking advantage of seniors, the insurance commissioners and insurance companies shall flush out the bad apples and discharge them properly with the needed punishment. Can the SEC honestly say that they are accomplishing that now with brokers and financial planners? Look at the number of lawsuits and that question can be answered. Look at the millionaire bad apples in the financial industry that have been exposed and convicted of wrongdoing with securities.
7. Fixed Indexed Annuities are an insurance product not a security and must be under the jurisdiction of the Insurance Commissioners. The reason that sales of Fixed Indexed Annuities annually total $ billions is that they are a superior product which should not be tinkered with by the SEC. Of course the power of the SEC shall increase if Fixed Indexed Annuities are judged to be securities. One must ask if that is what the SEC's hulaballo is all about. More POWER, not value or protection for the consumer.
Respectfully submitted,
Laurance E. Gill