August 15, 2008
Perhaps I am missing something here.
Can someone please show me any OTHER securities product on the face of the planet that guarantees the principal?
Over the last three decades I have learned that most investors fall into three categories. Those that can afford losses and want to have high risk in their portfolios, those that can afford some risk and those that can't afford any risk or losses to their portfolios.
Those that want risk will usually invest in stocks, bonds, variable annuities, mutual funds and other securities that offer higher potential but also offer losses.
Those who want safety and protection from losses should not be putting their money into securities and should stay with bank, credit union accounts and fixed annuities.
Please don't change a fixed account into an account that is a risk account.
I find it interesting reading the comments here that most of those supporting this regulation are brokers who are not dual licensed and don't even understand how a fixed indexed annuity works in the first place. Perhaps these brokers should stop giving insurance advice if they are not licensed to do so just as insurance agents should not be giving investment advice.
I have seen more people lose money investing in securities than I have ever seen by putting their money into a fixed annuity. In fact I have never seen anyone lose a dime of principal in a fixed indexed annuity, wish I could say the same about mutual funds or other securities.
Shouldn't this be about what is BEST for the consumer not what is best for the broker dealer community?
One thing that needs to be addressed is the distribution of these products. If this proposal passes and Fixed Indexed Annuities (FIA's) are to be sold only through broker dealers this will severely limit choices to investors.
Currently FIA's are sold through insurance agents who contract either directly though insurance companies or though FMO's. If an FMO does not offer the best product in your State then you simply find another FMO that does. It is not uncommon in the insurance industry for an agent to be using 3 to 5 FMO's or more at one time.
If you are limited to selling through a broker dealer and that broker dealer does not have a selling agreement with the best FIA's in your State then you would have to change BD's or become dual appointed by two BD's. Most broker dealers will NOT allow dual appointments.
New FIA products come out frequently and it has been my experience with BDs that they don't always want to sign new selling agreements with every new product that hits the street.
Please reconsider this proposal it will NOT benefit or protect the consumer any further. In fact it might do just the opposite by eliminating some of the guarantees and choices.
Just as the mutual fund industry has evolved from heavily sales loaded contractual plans to no load ETF's FIA's are also evolving. Many States are now on board with NAIC rules and more will certainly follow.