August 18, 2008
I do not think you should register Index Annuities as a security for a couple of reasons. First a contract holder has no risk of their principal in an index annuity if held past the surrender charge period. Also this can cause a billion dollars worth of damage to the industry without improving consumer protection one bit. This I and everyone else believes is all about the fees and money that FINRA is not receiving on these products. Currently the securities regulation already appears to do a lousy job protecting consumers as it is. Why would putting this into a poor system improve consumer protection? According to the NAIC ther were something like 600 variable annutity complaints, which are registered products, versus 300 complaints against indexed annuities. I meet with retirees everyday in this business and it baffles me how many times I ask about their risk tolerance and how much they can afford to lose at this stage in their life and they tell me they can not afford to lose a dime. But when I look at their current portfolio their current securities broker has them almost 90-100% at risk which is not in line what the consumer wants. Lets stop getting greedy here and stop trying to regulate where you do not belong. That is what the insurance regulators are for. I believe this again is just about greed and money and fees that the securies people are not receiving on these products.