Annuities: Oversight needed on Equity-Indexed Annuities
Sale of Equity Indexed Annuities has increased by 45% the first 6 months of this year. I worry that the vast majority of these sales are not appropriate for investors to buy them. Supervision by the Securities and Exchange Commission (SEC) and the National Association of Securities Dealers (NASD) is desperately needed to protect retirees from being taken to the cleaning agents hungry for committing large. READ MORE to find out how this oversight will benefit you.
For almost 2 years, I've been warning people against buying Equity-indexed annuities. Managers hope my articles have caused throughout the country to lose sales. That's why I'm regularly attacked and criticized by officers. When I started, I was a "single voice in the desert. "However, the SEC and the NASD is interested in the situation. The national media covering the story more regularly.'s chorus the voices calling for change is growing. For example, The Wall Street Journal an article on 15 October that echoed my complaints.
Greater regulation and supervision of these products is necessary because, although they are technically an insurance product, being sold as an investment. Anyone looking at the literature sales can clearly see this. With promises of market gains and the "guarantee" that will suffer no loss, this investment is promoted as the answer all your concerns. Investors are buying as an investment, not insurance. Therefore, to be regulated as investments and not as insurance.
The investors will benefit if the equity indexed annuities are classified as an investment. It will reduce but not eliminate, the potential for abuse. Here's why.
First, being classified as an investment will result in better disclosure of the risks involved with this product. Equity Indexed Annuities are complex products. Many of the sales agents do not even understand its complexities. Consumers are not sufficiently warned of the dangers they face in these products. Most think he can not lose money on this investment and it is not true.
For example, many of those who buy one of the most popular Equity indexed annuities do not realize that if they pull their money out of contract when the contract matures that will not receive the index-related returns they thought they would. In fact, those who want a lump sum of this specific product after 10 years would be guaranteed to make a total return of about 1.5% for the whole period 10 years. Few would buy such an investment if it is clearly understood.
Secondly, the sale of investments are necessary to ensure that investment they sell is suitable for the person who is selling a. When a sales commission based investment, it is reviewed by compliance officers to check their suitability. Compliance officers carefully consider the investment sales because it is their job to protect your company from lawsuits and regulatory fines. And they know that their companies may be audited by the SEC.
No compliance officer would approve the sale of an annuity Equity Indexed by 100% of the investable assets of a person – but I see that the recommendations all the time. No compliance officer approval of a transaction in which the investor pays a big penalty in an annuity contract to transfer the money in an Equity Indexed Annuity. This has become a problem, warning however that the NASD has published about him.
Third, equity Indexed annuities offer higher commissions to create a huge conflict of interest for the consultant. If you were a consultant and had the option of 2% or 15% into an account Which would you choose? Not surprisingly, equity indexed annuities have become so popular?
The Wall Street Journal reached the same conclusion I have – Investors should avoid actions over indexed annuities. And yet, as these agents go after the majority? Older investors, of course, because they are the ones most active.
Do not be surprised if in the not too distant future, new regulations emerge to reign in the wild west of the capital-indexed annuities. Until that day comes, do not fall for the equity-indexed annuity sales pitch. There are much better ways to get a decent market return with low risk, and you not have to relinquish control of their money to do so.
The Truth About Fixed Indexed Annuities by Pete Mitchell
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