July 2, 2008
Gentlemen and Ladies
Your decision to include indexed annuities as a security product has to be motivated from a place other than common sense or reason. For you to include EIA's to be included under a broker/dealer compliance restraint is neither understandable or rational. If a guranteed product, issued by an insurance company, with no risk of loss other than by premature surender or company liquidation, then all annuities must be regulated as they all are backed by securities.
Fixed annuities are backed by a bond portfolio, securities as of my last series 7 exam, and rates are determined in advance by the portfolio holdings. At no time is the portfolio's pricipal "at risk" and the variable is a bond portfolio payout minus fees. How is an EIA-Equity Indexed Annuity, any different? The principal is never at risk, the rate of return, however, is determined after the performance of an option, a security, that is valued based on the broad market index it is tracking. So why is an option based interest crediting method more of a security than a bond based interest crediting method??
If you were consistent, and we're not holding out hope, you would leave the insurance companies alone and stick to diciplining the brokers who place their clients in stock portfolios that lose money, even though the client may be in distribution or risk averse. IF you chose to investigate those inequities, you'd have your hands full enough...so much that you could hang up the phone on your Wall Street buddies and lobyists demanding to do something about all these stupid, ignorant insurance sales people moving wirehouse money to safe, insured savings plans Don't these clients know that we, wirehouses and b/d's, are smarter than them. Listen to us, they say. Well I say, let the client decide for themselves and let the capable insurance departments of each state manage the activities of their own.
We have our own SRO, mind your own DARN business
Regretably,
Frederick Charles "Rick" Whitford
Ignorant Insuance Agent
831-644-9637
Licensed Broker (7 66)
Insurance Lic. (Life, health, accident, pc)