July 21, 2010 | BestWire
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July 20, 2010 Tuesday 04:40 PM EST
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Financial Planning Coalition Regrets SEC Taken Out of Indexed Annuities
Jesse A Hamilton
WASHINGTON
The Financial Planning Coalition is disappointed that Congress chose to strip the U.S. Securities and Exchange Commission of the power to regulate equity-indexed annuities. The coalition — which includes the Financial Planning Association, the Certified Financial Planner Board of Standards and the National Association of Personal Financial Advisors — called it “dangerous” to remove that authority.
“Our concern is that under the present law, there may be some unsuitable sales,” said David A. Cohen, assistant director of government relations for the Financial Planning Association.
The outcome they are criticizing, though, is exactly what was hoped for by annuity issuers and state insurance commissioners, who had welcomed the other recent news that the U.S. Court of Appeals for the District of Columbia Circuit ordered an SEC rule to regulate equity-indexed annuities as securities to be vacated (BestWire, July 13, 2010). The SEC will soon be barred from regulating equity-indexed annuities as securities under an amendment included at the last minute within Congress’ financial regulatory reform bill, expected to be signed into law this week. “Our concern is that the SEC should have the right to make the rules and then go before a court, and the court can decide whether SEC has jurisdiction under the law,” Cohen said. “The legislation takes away the opportunity for the SEC to present its case before the court.”
In December 2008, the SEC had voted to reclassify the annuities as securities, not insurance products (BestWire, Dec. 17, 2009). That vote started a legal debate that led to the industry lawsuit.
“My opinion is that the states are actually doing a more efficient job of regulating annuity products than the security side is doing in regulating investments,” said Sheryl J. Moore, president and chief executive officer of AnnuitySpecs.com. She thinks groups like this coalition aren’t familiar with the full scale of regulatory activity performed in the states. “They’re just uninformed, and they have misconceptions that we’re not regulated. … That’s just not the case.”
Cohen said his group does recognize that states have been trying to respond to the potential concerns with these annuities. “It is now in the hands of state insurance commissioners,” he said.
The coalition did, however, commend Congress for the other consumer protections in the financial reform bill, particularly applauding the extension of the fiduciary standard of care to brokers giving investment advice and a Government Accountability Office study on regulating the financial planning industry. In a survey earlier this year of several thousand members, the coalition reported that almost 59% of the financial planners knew of a person who had been the victim of bad or dishonest financial advice.
(Jesse A. Hamilton, Washington bureau manager: [email protected])
July 21, 2010
Originally Posted at InsuranceNewsNet on July 21, 2010 by Sheryl J. Moore.
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Monday, Jul 26
2010
John Hamilton
Cohen’s statement is nothing short of laughable! In fact, if this is the best he can come up with as the assistant director of government relations for the Financial Planning Association, he should be replaced! His statement, i.e. “Our concern is that under the present law, there may be some unsuitable sales” is merely a smoke screen for Wall Street’s, FINRA’s and the SEC’s real reason for wanting the SEC to regulate FIA’s and that is…the huge amount money pouring into products with real guarantees and, consequently, which is costing the Wall Street “hucksters” billions of dollars under management and all the corresponding fees! People are sick of Wall Street with its broken promises and insider dealings and the desire a saner and more predictable option; fixed annuities!
To say that Wall Street brokers make unsuitable sales far in excess of the insurance agency rep’s is one of the biggest understatements in the history of the World!!! It is disgusting the number of times that I have witnessed retirees being “slammed” into variable annuities and being told that the “contract” cannot lose value. The client comes away believing that the account balance cannot lose money and when they learn that the “contract” cannot lose money due to the death benefit, they are feeling duped, because they have been! It is obvious that Wall Street, the SEC and FINRA thinks it perfectly permissible to place a retiree’s much needed saving at risk in the market, then lie to them about the death benefit and the income rider “guaranteeing” a 4-6% return, which is rarely fully explained to the client but, heaven forbid if a rep suggests a more conservative and far safer way to preserve their savings by using a fixed annuity!
Frankly speaking, Wall Street has made fortunes for many, many years now at the expense of the public and the SEC has been complicit in it happening.
Monday, Jul 26
2010
bob martnez
the problem with the nonqualified variable annuities is the eroding of your accounts every quarter so after 10 quarters, 2.5 yrs you will find each account you have has been reduced by 6.6% to pay the mortality and expense fee’s.after 10 yrs your account will be reduced by 26.4% it is a steady reduction of your accounts,find an exit point and take care of your own money with a fixed annuity that can build your own personal social security engine.