October 17, 2008
Thank God for Indexed annuities which are mostly sold by Insurance Agents who had the courage and knowledge to offer a true opportunity without direct market risks at a time when virtually every financial tool outside of guaranteed products has failed. Insurance agents across the nation helped save many more people's retirements from the current financial debacle, and avoided the FINRA governed securities options often costing consumers rediculous fees. Making and FIA a security would create fewer options to the client, less competition, more fees passed on to clients, and no true alternative to Bank practices (another recent debacle) or Securities practices(responsible for Billions in Losses) for people who simple can't afford the loss.
FINRA of course would like to control indexed annuities but not because of regularoty reasons, but to create yet another environement of unfair compentition and thus an additional profit center controlled by and rolled up to FINRA and Broker Dealers nationally. Consumers need more competition, not less. Consumers need more options, not fewer. Consumers need more regulation on securities with fewer fees and less risks, and not more regulation on PROVEN FIXED products that look like heros to my clients today.
Ironic when Securities Practices fail and money leaves the control of FINRA regulated agencies, which is ultimately responsible for the destruction of many pre-retirees and Seniors financial stability, how they would like to increase regulation on what they can't control, thus stopping money from funnelling through their channels. FINRA has failed many people, and the last thing we need is to give them more control and responsibility.
I am an advocate for a National Insurance Commissioner to unify and simplify and govern the products available between states, as well as the excessive administrative practices that ultimately take away from consumer values and make the industry more complicated.
Having Insurance products not be regulated by FINRA or SEC for that matter helps to provide a fair alternative for consumers who deserve less regulation and political manipulation, and more options not controlled by FINRA. Basic quality control begins with Competition and Diversification (Options), followed by opposing governing agencies that serve a Check and Balance function naturally, without the over regulation.
It would be a disservice to our citizens to allow FINRA to control and supervise any Fixed or Fixed Indexed annuities. In the end it isn't about regulation, it's about greed and control enforced by FINRA and acted on by Broker Dealers who should be more focussed on cleaning up their own financial mess after the losses their clients have suffered recently. Competition is a GREAT Thing. Like it or not, there is a reason we have a Judicial system, and President, and a Congress, neither of which is entrusted in its entirety to control everything. FINRA would be a financail dictator limmiting consumer options, increasing fees, and ultimately governing profits, if they or their Broker Dealers couldn't profit under the false premise that more regulation is needed.
Thank God my owm mom has Indexed Annuities that kept her from loosing everyingthing, and still position her for opportunity if the Market does improve. She sleeps well at night because of Indexed Annuities. She doesn't sleep well because of Losses in Managed FINRA Governed Broker Dealer Accounts.
I have spend several years recruiting and training advisors with many so called upper level Series Six and Series Seven credentials, and I am shocked how little they know about alternatives outside of fee based managed accounts. Many are flat ignorant to anything other than what's easiest and pays the most over time, weather the make money or loose money for their client. If they loose a client, they just find another and charge a fee for as long as possible.
Having said this, there are many things that can be done. I would like to see more regulation on the design of products which increase Minimum guarantees or even offer 1% annually. I would like to see a better control on the cap lock periods or how much they can fluctuate in a given year, which again is a product design issue. I would like to see increased liquidity of perhaps 20% in any given year (even a one time option) without surrender charges. Most importantly I would like to see heaver consequences and enforcement for the bad practices of a few agents and financial professionals who clearly do take advantage of a client. Enforcing ethics legally through a National Insurance Based Judicial Counsell and controlling product design is how you regulate the true value to clients and hold agents and advisors accountable, thus discouraging or limitting poor presentation practices.
Finally, I find it gross negligence that a brand new advisor with a Series six or sevn license can convince a 70 year old retiree to risk everything in the Markets and charge him a fee, often forcing seniors back to work when things fail, while we ignorantly try to control, limit, over-regulate the few alternatives that have served seniors for years without lossing real equity. Oh by the way, those same advisors don't police their own and simply move on to another client if they loose everything or become unsatisfied by poor results or poor service. FINRA has enough to regulate and exemplifies the very failed practices of over regulation government has been known for. If you want to hurt our growing senior population, put FINRA in charge. Just look at the number of seniors who couldn't afford the losses they just suffered, while under the regulatory jurisdiction of FINRA.
If our recent debacle in the economy has tought us anything, it should be that risking everything may actually mean everything, if our economy doesn't do so well. Fixed Indexed Annuities are hero's in my opinion. This shouldn't come as a suprise that I am an insurance agent who has worked with clients for years and trained many advisors at alll levels on insurance based non-FINRA governed products. Most importantly, I have never lossed a pennie of anyone's money in an annuity... all that is without FINRA.
Sincerely,
Robert Baker