Equity Indexed Annuities and the Broker

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Jul 11, 2005 12:23 pm

Link to article   


http://www.financial-planning.com/pubs/fpi/20050705102.html


Selman described a recent complaint involving a 94-year-old woman and her 91-year-old husband. An insurance agent recommended that the pair liquidate $800,000 in fixed income savings, the bulk of their assets, in order to buy an EIA with a 14-year surrender charge. Selman said that another remarkable aspect of the case was that the complaint was filed with the registered representative who was managing the fixed income portfolio......


So because we have bunch of unethical "insurance agents" who innapropriately sell EIA's the broker/dealers are going to have to institute yet more supervision and regulations (paperwork) for the securities licensed insurance agent.  It seems that unless they classify  EIAs as security investments, insurance agents will still have a free ride to push these products with no supervision.  Either it is a security under the SEC or it is not.


I wish I could find these guys and put their balls in a wringer.  They give us all a bad name and make my E&O premiums go up every year. 

Jul 11, 2005 2:31 pm

Hmmm, seems like someone just started a thread on this and it got bashed! I agree with you...EIA's give me the most grief when transferring in an account. I am sure (?) there are good ones out there and a reason to sell them but, there are soo many mis-sold

Jul 11, 2005 4:08 pm
Guest1:

Hmmm, seems like someone just started a thread on this and it got bashed! I agree with you...EIA's give me the most grief when transferring in an account. I am sure (?) there are good ones out there and a reason to sell them but, there are soo many mis-sold


I don't have any trouble with them. Sounds like you have a personal problem, or twelve.


If you have a question mark after "sure" that means you question your own ability to perform due diligence. I am not surprised. Your lack of confidence comes from your lack of competence.

Jul 11, 2005 8:15 pm

There are good EIAs out there and I have sold them when appropriate and in conjunction with a complete financial plan.  What I am complaining about is the idea that the b/d may supervise these and require us to do even more paperwork than we arlready are required to do: while at the same time possibly allowing the non-securities licensed insurance agent to proceed merrily along his/her way.  If they consider EIAs to be securities then we will be "selling away" if we decide to use a company that isn't on the b/d's list.


I left Jones for many reasons but one big reason was the barriers that they put in place to sell insurance and the really crappy insurance products that they 'allowed' us to use.  They made it virtually impossible to compete, and the paperwork required was so burdensome that the clients just said "forget it".   Security compliance people don't have a clue on insurance or annuities.  They act like insurance products are comprable to two headed cobras.


My bitch is that if we have to supervise an EIA as a security then make it one, and remove it from the insurance side so that all EIAs are treated the same.

Jul 11, 2005 8:42 pm
babbling looney:

There are good EIAs out there and I have sold them when appropriate and in conjunction with a complete financial plan.  What I am complaining about is the idea that the b/d may supervise these and require us to do even more paperwork than we arlready are required to do: while at the same time possibly allowing the non-securities licensed insurance agent to proceed merrily along his/her way.  If they consider EIAs to be securities then we will be "selling away" if we decide to use a company that isn't on the b/d's list.


I left Jones for many reasons but one big reason was the barriers that they put in place to sell insurance and the really crappy insurance products that they 'allowed' us to use.  They made it virtually impossible to compete, and the paperwork required was so burdensome that the clients just said "forget it".   Security compliance people don't have a clue on insurance or annuities.  They act like insurance products are comprable to two headed cobras.


My bitch is that if we have to supervise an EIA as a security then make it one, and remove it from the insurance side so that all EIAs are treated the same.



Don't worry. A fixed index annuity is not a security, by any currently accepted definintion. Ask your securities attorney. I have one in my office, and he's done the research.


One of the reasons the NASD wants to control your life is that so much of the premium is not flowing through the B/D. They want YOUR money. Remember, the NASD is NOT the NASB.


This is an issue that Bill Singer has brought up time and time again, but most wirehouse RRs are afraid of their shadow. If more of them had balls, they'd organize.


I generally dislike unions, but if there was ever a time where a large group of professionals could benefit from organizing, it's the RRs of the various SROs.


The real obstacle here is that one cannot legislate common sense, and no law making body can outlaw stupidity. If we could outlaw stupidity, Put the crack boy would be euthanized.


If the NASD decides to treat an FIA as a security, when it isn't, effectively removing them from the B/D channel, that will just erode the profitabiilty of the B/D channel -- adding to what is already tremendous pressure.


Their best bet is to STFU and stick to what they know (which isn't much). The NASD doesn't know how to regulate variable contracts. It is foolish to expect the to regulate fixed insurance contracts. They simply do not have the wherewithal, experience or expertise.

Jul 12, 2005 12:47 am
Roger Thornhill:
babbling looney:

There are good EIAs out there and I have sold them when appropriate and in conjunction with a complete financial plan.  What I am complaining about is the idea that the b/d may supervise these and require us to do even more paperwork than we arlready are required to do: while at the same time possibly allowing the non-securities licensed insurance agent to proceed merrily along his/her way.  If they consider EIAs to be securities then we will be "selling away" if we decide to use a company that isn't on the b/d's list.


I left Jones for many reasons but one big reason was the barriers that they put in place to sell insurance and the really crappy insurance products that they 'allowed' us to use.  They made it virtually impossible to compete, and the paperwork required was so burdensome that the clients just said "forget it".   Security compliance people don't have a clue on insurance or annuities.  They act like insurance products are comprable to two headed cobras.


My bitch is that if we have to supervise an EIA as a security then make it one, and remove it from the insurance side so that all EIAs are treated the same.



Don't worry. A fixed index annuity is not a security, by any currently accepted definintion. Ask your securities attorney. I have one in my office, and he's done the research.


One of the reasons the NASD wants to control your life is that so much of the premium is not flowing through the B/D. They want YOUR money. Remember, the NASD is NOT the NASB.


This is an issue that Bill Singer has brought up time and time again, but most wirehouse RRs are afraid of their shadow. If more of them had balls, they'd organize.


I generally dislike unions, but if there was ever a time where a large group of professionals could benefit from organizing, it's the RRs of the various SROs.


The real obstacle here is that one cannot legislate common sense, and no law making body can outlaw stupidity. If we could outlaw stupidity, Put the crack boy would be euthanized.


If the NASD decides to treat an FIA as a security, when it isn't, effectively removing them from the B/D channel, that will just erode the profitabiilty of the B/D channel -- adding to what is already tremendous pressure.


Their best bet is to STFU and stick to what they know (which isn't much). The NASD doesn't know how to regulate variable contracts. It is foolish to expect the to regulate fixed insurance contracts. They simply do not have the wherewithal, experience or expertise.



Ummm....this couldn't be about any political/financial benefit to the NASD, could it?  NAWWWWWWWW......

Jul 12, 2005 3:10 am
joedabrkr:

Ummm....this couldn't be about any political/financial benefit to the NASD, could it?  NAWWWWWWWW......


Since they started charging for seminars, I don't trust them as far as I can PUT them. No pun intended. 


The better states put on their dog and pony shows gratis. Why does the NASD feel they should charge? I call that totalitarian coercion.

Jul 17, 2005 11:27 am

in 6 years I have yet to see an equity index annuity that was sold
properly to a client who has a decent understanding of how it
works. 



More often they're sold by guys in polyester suits who drive 85 year
old ladies to the bank and sit with them by the desk while they pay a
3% cdsc to liquidate their CDs.  "Oh, but I get a 15% BONUS in the
first year!" they say.  "How come the bank can't pay me 15%?"



Some jackoff tried selling one to my dad for 100% of his retirement
money, which he needs to keep liquid for medical expenses.  I
wrote a letter to the state insurance department.

Jul 17, 2005 6:37 pm
george:

in 6 years I have yet to see an equity index annuity that was sold properly to a client who has a decent understanding of how it works. 


Here, let me help you Handing george a towel


Wipe behind your ears, sonny.


If you actually worked with a reasonable number of prospects, you could not make your statement, unless you're just not very smart.

Jul 18, 2005 9:17 am
george:

in 6 years I have yet to see an equity index annuity that was sold properly to a client who has a decent understanding of how it works. 

More often they're sold by guys in polyester suits who drive 85 year old ladies to the bank and sit with them by the desk while they pay a 3% cdsc to liquidate their CDs.  "Oh, but I get a 15% BONUS in the first year!" they say.  "How come the bank can't pay me 15%?"

Some jackoff tried selling one to my dad for 100% of his retirement money, which he needs to keep liquid for medical expenses.  I wrote a letter to the state insurance department.



Sad, but true. Notice even those who defend them can't make a logical argument for them and how they're usually sold, they have to resort to school yard name calling instead.

Jul 18, 2005 10:29 am
Roger Thornhill:
stanwbrown:

Sad, but true. Notice even those who defend them can't make a logical argument for them and how they're usually sold, they have to resort to school yard name calling instead.



Did you ever figure out how to type up a fact finder, stanwbrowneye?



Seems that someone who had been around a while would already have one of these.





Actually, I had several over the years and wanted to upgrade all files to a single, all inclusive, version. Ask me if I'm surprised that no one on that lame site had a good example



....

Jul 18, 2005 11:52 am
stanwbrown:

Actually, I had several over the years and wanted to upgrade all files to a single, all inclusive, version. Ask me if I'm surprised that no one on that lame site had a good example


Apparently, nobody thought you were worthy. It's truly funny that the newbys don't ask for a basic fact finder, but YOU do. Sounds like you need a towel for your ears.

Jul 18, 2005 12:27 pm

You didn't out me, that's somebody else. I bet he'd like to know that you're libeling him. I'll email him and let him know. Thanks for the ammo.

Jul 18, 2005 9:25 pm

Apparentely you guys know nothing about EIA's or the Co's that set the standards. ALLIANZ and ING!!! If you would take the time and go to indesannuity.org or smartmoneyplaces.com you might learn a thing or two.

Jul 23, 2005 11:56 pm

hey, it ain't the company, it's the players.  I've seen the
Allianz product.  It was sold to this one lady who had no idea she
would have limited withdrawls for the next twelve years.  A call
center flunky rang her up and said he wanted to send someone out to
discuss her annuity at the bank.  In this instance, she actually
happened to have an annuity at the bank, (the hit or miss approach
worked) so she agreed, thinking the "advisor" was from my branch. 
The guy came out, and after some initial confusion about who he worked
for, he did a 1035 into Allianz.  Two months later, a little
confused, she came into the branch to discuss this, and was shocked and
amazed that she couldn't access her money.  At this time, her free
look had elapsed, and she didn't have the stones to take the guy to
court or arbitration.  She's 76 years old and uses a walker. 




Hey, I've got more if you want to hear them...