Breaking news: SEC approves Ruling 151A
Oh yeah, baby!
Time to hit the books, Hank/Bobby. http://www.seniormarketadvisor.com/r/smaMag/d/contentFocus/?adcID=32aa5c9781bc7d33721c877a08ea9887Can you post a link? I'm searching for it and can't find anything.
http://www.marketwatch.com/news/story/SEC-Ignores-Congressional-State-Industry/story.aspx?guid={2F84E1F1-DC5F-4C02-BBAA-4C0042C85C80}
Well that’s fine, as long as the product doesn’t change, actually better for those that have the license. So now they will have to be run through a BD and you’ll get a haircut on the commission. Less competition, not that there was any really to begin with. Probably no more Dateline shows.
It's a great product in the right situation. By the way, here's a site about this rule, although not really unbiased: http://sec151a.com/The Securities and Exchange Commission (SEC) has scheduled a hearing for Dec. 17 which may regard proposed Rule 151A. We urge you to call your congressman today!
Hahahahahaha.
Sure, he can still sell them, but now he’ll wonder whether big brother is listening in on his seminars at the nursing home.
[quote=Borker Boy]Sure, he can still sell them, but now he’ll wonder whether big brother is listening in on his seminars at the nursing home.
[/quote] Wow. You really think that low of him? What, may I ask, do you do that puts you on such a high pedestal?I sell American Funds. Need I say more?
[quote=Borker Boy]
I sell American Funds. Need I say more?
[/quote] Yes. Absolutely say more. How much do you charge for these index funds, I mean, American Funds?Dick Butkus,
Why didn’t you choose a tougher name, like, “Tat Sacklick”?
Sorry, standing joke. Couldn’t resist.
[quote=Dick Butkus][quote=Borker Boy]
I sell American Funds. Need I say more?
[/quote] Yes. Absolutely say more. How much do you charge for these index funds, I mean, American Funds?[/quote] That depends. What's the maximum amount you'd like to invest today, Mr. Butkus? And the maximum?[quote=Borker Boy][quote=Dick Butkus][quote=Borker Boy]
I sell American Funds. Need I say more?
[/quote] Yes. Absolutely say more. How much do you charge for these index funds, I mean, American Funds?[/quote] That depends. What's the maximum amount you'd like to invest today, Mr. Butkus? And the maximum?[/quote] Well I might have $40,000. I can bring you my brother, he has $150,000. My friend has about $600,000. And I know Mike Ditka is sitting on $1.5MM. What's the total cost in each of our situations and how is it paid?That’s a great question. I’m glad you asked.
Actually, I hate Mike Ditka, so he can keep his money. Let's talk about you, Butkus. I know you can scrounge up a piddly $1 million, and at that level, there will be NO sales charge--coming or going. NONE, ZERO, ZILCH. No 15%, fifteen year surrender penalties, no caps, no participation rates, no crazy crediting methods to have to contend with. Just 100% transparency. So, what's it gonna be, butt kiss?[quote=Borker Boy]That’s a great question. I’m glad you asked.
Actually, I hate Mike Ditka, so he can keep his money. Let's talk about you, Butkus. I know you can scrounge up a piddly $1 million, and at that level, there will be NO sales charge--coming or going. NONE, ZERO, ZILCH. No 15%, fifteen year surrender penalties, no caps, no participation rates, no crazy crediting methods to have to contend with. Just 100% transparency. So, what's it gonna be, butt kiss?[/quote] Hmmm. "NONE, ZERO, ZILCH". That does sound intriguing. BUT, I've heard of things like expense ratios and trading costs, so is there something you're hiding from me? Trust is difficult to develop when one party lies or omits material facts. Here's the thing Borker Girl. I don't need you to make me money. I need you to not lose me any money. You see, young pup, I've hit enough people on the football field over the years and I've made it. Tell me, how much risk am I really taking with your suggestions?So, let me get this straight. Those who are anti-EIA are for SEC oversight of these products? These products who, when held for the length of the surrender charge, will not lose a client money? The same SEC who’s “oversight” somehow missed Bernie Madoff’s $50 BILLION Ponzi scheme? Where hundreds of individuals, institutions, charitable organizations have now seen their accounts lost (presumably forever)? That SEC?
I don't sell EIAs as my B/D will not allow it, but it seems like those who voted yes on 151a are truly non-thinkers. The same assesment can be made of those who have reacted with joy over this. Either you truly do not understand how these products can work in conjunction with one's other assets, or you refuse to learn. Either way, I can make the case that you are doing your clients a disservice. And yes, I realize there are unethical reps who sell these products. Just like there are unethical agents selling every financial product under the sun. So spare us the horror stories of EIAs. We've heard them. I know the previous statements are going to start a shit-storm, so have at it. I'm ready to defend my position. Be prepared to do the same for your cases.[quote=Borker Boy]That’s a great question. I’m glad you asked.
Actually, I hate Mike Ditka, so he can keep his money. Let's talk about you, Butkus. I know you can scrounge up a piddly $1 million, and at that level, there will be NO sales charge--coming or going. NONE, ZERO, ZILCH. No 15%, fifteen year surrender penalties, no caps, no participation rates, no crazy crediting methods to have to contend with. Just 100% transparency. 1% CDSC in the first year. Forget about that one? 100% transparency? Really? Since when can you find out when a manager buys and sells something? How much a commission do they pay when they buy and sell? So, what's it gonna be, butt kiss?[/quote] You truly have no idea how mutual funds work. I can tell.deekay,
Have you ever inquired with your B/D as to why they do not allow the sale of EIA’s? If so, what was their response?
[quote=deekay]So, let me get this straight. Those who are anti-EIA are for SEC oversight of these products? These products who, when held for the length of the surrender charge, will not lose a client money? The same SEC who’s “oversight” somehow missed Bernie Madoff’s $50 BILLION Ponzi scheme? Where hundreds of individuals, institutions, charitable organizations have now scene their accounts lost (presumably forever)? That SEC?
I don't sell EIAs as my B/D will not allow it, but it seems like those who voted yes on 151a are truly non-thinkers. The same assesment can be made of those who have reacted with joy over this. Either you truly do not understand how these products can work in conjunction with one's other assets, or you refuse to learn. Either way, I can make the case that you are doing your clients a disservice. And yes, I realize there are unethical reps who sell these products. Just like there are unethical agents selling every financial product under the sun. So spare us the horror stories of EIAs. We've heard them. I know the previous statements are going to start a shit-storm, so have at it. I'm ready to defend my position. Be prepared to do the same for your cases.[/quote] This is the kind of advisor I'm looking for. You need to switch B/D's so you can help me, not this mutual fund jokester that will help me lose what I've got.I have. Given the regulatory uncertainty, they decided to make things easy for themselves and restrict their reps' use of them. Now that there has been a ruling, I am not sure how they will respond.deekay,
Have you ever inquired with your B/D as to why they do not allow the sale of EIA’s? If so, what was their response?
I only ask because I can’t imagine any BD forbidding the sale of any type of investment that is both a great value to the client and very profitable to the BD, whether it is regulated by the SEC or not.
You do realize EIAs are not an investment, right?
Anyway, I cannot comment on what, if any, alterior motives my B/D had in restricting use of EIAs withh clients. The official line is what I'm going with until someone tells me otherwise. For the record, I see why they have taken that stance. One less compliance issue to worry about means more time they can spend on more productive pursuits.Really, are fixed annuities?
Never mind, I’ll re-phrase, “I only ask because I can’t imagine any BD forbidding the sale of any
type of insurance product that is both a great value to the client and very
profitable to the BD, whether it is regulated by the SEC or not.”
[quote=deekay]
Anyway, I cannot comment on what, if any, alterior motives my B/D had in restricting use of EIAs withh clients. The official line is what I'm going with until someone tells me otherwise. For the record, I see why they have taken that stance. One less compliance issue to worry about means more time they can spend on more productive pursuits.[/quote]I respect your humility. Perhaps others here may have some input. Are there any folks from, oh, I don't know, Merrill, UBS, AGE/WB, MS, Smith Barney or others who can answer my question, which is, "Why would any BD forbid the sale of any investment (insurance product/contract) that is both a great value to the client and very profitable to the BD?"
Please see my edited post above.
Done. See above.
[quote=YHWY] [quote=deekay]
Anyway, I cannot comment on what, if any, alterior motives my B/D had in restricting use of EIAs withh clients. The official line is what I'm going with until someone tells me otherwise. For the record, I see why they have taken that stance. One less compliance issue to worry about means more time they can spend on more productive pursuits.[/quote]I respect your humility. Perhaps others here may have some input. Are there any folks from, oh, I don't know, Merrill, UBS, AGE/WB, MS, Smith Barney or others who can answer my question, which is, "Why would any BD forbid the sale of any investment (insurance product/contract) that is both a great value to the client and very profitable to the BD?"
[/quote] I would guess that they don't sell them because of the regulatory uncertainty combined with their focus on AUM vs. insurance products. There's a reason most wirehouse reps don't sell any insurance products. There's no margin for the rep or the firm when commissions must be put through the grid.
[/quote]
There's a reason most wirehouse reps don't sell any insurance products. There's no margin for the rep or the firm when commissions must be put through the grid.[/quote]That is 100% contrary to my experience, if you consider AGE to have ever been a wirehouse. Any other wirehouse folks have any input?
[quote=Borker Boy]
Oh yeah, baby!
Time to hit the books, Hank/Bobby. http://www.seniormarketadvisor.com/r/smaMag/d/contentFocus/?adcID=32aa5c9781bc7d33721c877a08ea9887[/quote]What books?
[quote=Borker Boy]Sure, he can still sell them, but now he’ll wonder whether big brother is listening in on his seminars at the nursing home.
[/quote]You are a Jones broker. Enough said.
[quote=Hank Moody]
[quote=Borker Boy]
Oh yeah, baby!
Time to hit the books, Hank/Bobby. http://www.seniormarketadvisor.com/r/smaMag/d/contentFocus/?adcID=32aa5c9781bc7d33721c877a08ea9887[/quote]What books?
[/quote]
GREAT forecheck!!!!
[quote=Borker Boy]That’s a great question. I’m glad you asked.
Actually, I hate Mike Ditka, so he can keep his money. Let's talk about you, Butkus. I know you can scrounge up a piddly $1 million, and at that level, there will be NO sales charge--coming or going. NONE, ZERO, ZILCH. No 15%, fifteen year surrender penalties, no caps, no participation rates, no crazy crediting methods to have to contend with. Just 100% transparency. So, what's it gonna be, butt kiss?[/quote]Which of the companies held in your american funds have going concern qualifications?
There's a reason most wirehouse reps don't sell any insurance products. There's no margin for the rep or the firm when commissions must be put through the grid.[/quote]
That is 100% contrary to my experience, if you consider AGE to have ever been a wirehouse. Any other wirehouse folks have any input?
[/quote] My experience is that I sell more death benefit in a month than most wirehouse reps sell in their entire careers. Same thing goes for disability income insurance. Bottom line is, when I get a net 85% payout on insurance products vs. a wirehouse rep who gets a net 20% payout, it's not hard to see why a wirehouse rep will focus much more on marketable securities and charging AUM fees.
It doesn’t go into effect until January of 2011. That leaves plenty of time to reverse the ruling.
Then why doesn’t your firm allow EIA’s? They are obviously comfortable with sophisticated insurance products, some of which are and have been overseen by the SEC?
There's a reason most wirehouse reps don't sell any insurance products. There's no margin for the rep or the firm when commissions must be put through the grid.[/quote][quote=YHWY]
That is 100% contrary to my experience, if you consider AGE to have ever been a wirehouse. Any other wirehouse folks have any input?
[/quote] My experience is that I sell more death benefit in a month than most wirehouse reps sell in their entire careers. Same thing goes for disability income insurance. Bottom line is, when I get a net 85% payout on insurance products vs. a wirehouse rep who gets a net 20% payout, it's not hard to see why a wirehouse rep will focus much more on marketable securities and charging AUM fees.[/quote]
I love asking people why the suppose their brokers never mentioned insurance products to them.
[quote=YHWY]Then why doesn’t your firm allow EIA’s? They are obviously comfortable with sophisticated insurance products, some of which are and have been overseen by the SEC?
[/quote]
B/D’s don’t allow EIA’s because they can’t get a piece of the action. I guarantee you that the b/d’s were much of the driving force behind turning them into securities.
Hank,
As a business owner in this very field, I’d love your input as to why would any BD forbid the sale of any product that is both a great value to the client and very profitable to the firm? Especially one (EIA’s) that you’ve provided so much valid, positive information about?
Sorry, jumped the gun. That answer doesn’t hold water. EIA’s can be mandated to Be run through the firm at any BD just like any other annuity and, like any annuity, they can set the payout wherever they choose (keeping whatever “cut” they choose).
Back on topic, does anyone know what happens to existing EIA’s when (or if) this rule is enacted?
My B/D restricted the use of EIAs in the last two years or so. Their position is that there was/is too much regulatory uncertainty regarding EIAs. Since I'm not in a position to change corporate policy, it's safe to assume I don't have an inside track to their alterior motives. For all I know they say "regulatory uncertainty" when they mean "these products suck and are 100% not appropriate for any client." I can't be sure either way.Then why doesn’t your firm allow EIA’s? They are obviously comfortable with sophisticated insurance products, some of which are and have been overseen by the SEC?
[quote=Sam Houston]Back on topic, does anyone know what happens to existing EIA’s when (or if) this rule is enacted? [/quote]
They will have to be surrendered and the money put into the new regulated ones. Yes, there will be a new commission.
Here's what I could find: http://www.sec.gov/rules/proposed/2008/33-8933.pdf See bottom of page 45. As best I can tell, the rule would be in effect for new contracts as of the effective date, which could be anywhere from 60 days to 2 years.Back on topic, does anyone know what happens to existing EIA’s when (or if) this rule is enacted?
Thank god for regulation!!![quote=Sam Houston]Back on topic, does anyone know what happens to existing EIA’s when (or if) this rule is enacted? [/quote]
They will have to be surrendered and the money put into the new regulated ones. Yes, there will be a new commission.
But hey, they were only sold in the first place because of those FAT commissions The short-sightedness and hypocracy of the SEC and their cronies is truly comical. Again, nobody has been able to answer this fundamental question: the SEC missed a $50 billion Ponzi scheme but feels qualified and justified in regulating a product that IS NOT AN INVESTMENT. How does this make sense? Could it be that Bernie Madoff's relationship with the NASD kept the wolves at bay while he destroyed the financial lives of literally millions of people? Could it be investment firms feel threatened by the emergence of EIAs as a viable alternative to mutual funds, securities, and wrap accounts?[quote=Sam Houston]Back on topic, does anyone know what happens to existing EIA’s when (or if) this rule is enacted? [/quote]
They will have to be surrendered and the money put into the new regulated ones. Yes, there will be a new commission.
Thank god for regulation!!![/quote] Houston...we have a gullibility problem....[quote=Hank Moody] [quote=Sam Houston]Back on topic, does anyone know what happens to existing EIA’s when (or if) this rule is enacted? [/quote]
They will have to be surrendered and the money put into the new regulated ones. Yes, there will be a new commission.
It was a serious question, and I did catch the sarcasm in the response. Just wondering if anyone knows.
Actually, Hank’s senario isn’t too far-fetched. My guess is the SEC will start messing with minimum/maximum caps, free withdrawal amounts, and maximum CDSCs. All those EIAs that fall outside those requirements will need to be replaced.
thanks
From the summary of the report:Actually, Hank’s senario isn’t too far-fetched. My guess is the SEC will start messing with minimum/maximum caps, free withdrawal amounts, and maximum CDSCs. All those EIAs that fall outside those requirements will need to be replaced.
"The proposed rule would apply on a prospective basis to contracts issued on or after the effective date of the rule."
From the summary of the report:[quote=deekay]Actually, Hank’s senario isn’t too far-fetched. My guess is the SEC will start messing with minimum/maximum caps, free withdrawal amounts, and maximum CDSCs. All those EIAs that fall outside those requirements will need to be replaced.
"The proposed rule would apply on a prospective basis to contracts issued on or after the effective date of the rule."
[/quote] I understand, and thanks for the clarification. Since when is the goverment in the business of keeping promises? Just as easily they wrote this proposal they can change it after it passes. Don't kid yourself into thinking otherwise.Never mind, I’ll re-phrase, “I only ask because I can’t imagine any BD forbidding the sale of any type of insurance product that is both a great value to the client and very profitable to the BD, whether it is regulated by the SEC or not.”
I don't sell EIAs (I can't). The SEC is 100% wrong on this issue. A B/D will forbid the sale of a product because they aren't making any money on it, yet its sale must still be monitored as an outside business activity. Allowing the sale of these products has no benefit for the B/D if the sale doesn't have to go through the grid. I think that you mentioned in another post something about a B/D forcing the sale to go through the grid. For those who have an independent B/D (LPL and most of the insurance company reps), I don't think that it's even possible to force this. There is no employer-employee relationship. Insurance sales are simply an outside business activity. A B/D can say "no" to an outside business activity. They can't say "Ok, but only if you pay me." It's the equivalent of telling a non-employee registered/rep, "You can bartend on the weekends, but only if you put your tips through the grid." The difference is that bartending doesn't compete for investment dollars, so they don't say "no". An EIA competes and it doesn't get put through the grid, so they say "no". In short, it may be of value to the client, but it doesn't benefit the B/D, and, in fact, hurts them, so they ban them. An EIA is no more a security than a savings account. The fact that interest is credited based upon market factors is irrelevant. The money is not in the market. The interest on your savings account is also credited based upon market factors.[quote=deekay][quote=Borker Boy]That’s a great question. I’m glad you asked.
Actually, I hate Mike Ditka, so he can keep his money. Let's talk about you, Butkus. I know you can scrounge up a piddly $1 million, and at that level, there will be NO sales charge--coming or going. NONE, ZERO, ZILCH. No 15%, fifteen year surrender penalties, no caps, no participation rates, no crazy crediting methods to have to contend with. Just 100% transparency. 1% CDSC in the first year. Forget about that one? 100% transparency? Really? Since when can you find out when a manager buys and sells something? How much a commission do they pay when they buy and sell? So, what's it gonna be, butt kiss?[/quote] You truly have no idea how mutual funds work. I can tell. [/quote] You made my point. How many people do you think read what I wrote and actually researched it to see if what I said was true? I'd imagine that most who are unfamiliar with $1 million mutual fund breakpoints assumed what I said was accurate and thought nothing more of it. Imagine how easy it would be to deceive a group of 80 year-olds at a nursing home. Do you think they're actually going to follow up on an EIA salesman's statements or read the extremely confusing materials he gives them? Hence the hundreds of millions in lawsuits being filed against these guys. The bigger issue here is not whether EIAs are securities--they're not--but the tremendous need for a greater level of protection for investors. The state insurance boards are a complete joke, and if guys are going to stand up in front of a group of folks at the Golden Corral and give their opinion/advice about the stock market and how it will hurt them if they don't buy their product but change their lives if they do buy their product, they need a securities license. That's the issue. Maybe, just maybe, the idea that another group of people are now paying attention to how these guys are closing sales will help protect would be victims of predators.[quote=Borker Boy][quote=deekay][quote=Borker Boy]That’s a great question. I’m glad you asked.
Actually, I hate Mike Ditka, so he can keep his money. Let's talk about you, Butkus. I know you can scrounge up a piddly $1 million, and at that level, there will be NO sales charge--coming or going. NONE, ZERO, ZILCH. No 15%, fifteen year surrender penalties, no caps, no participation rates, no crazy crediting methods to have to contend with. Just 100% transparency. 1% CDSC in the first year. Forget about that one? 100% transparency? Really? Since when can you find out when a manager buys and sells something? How much a commission do they pay when they buy and sell? So, what's it gonna be, butt kiss?[/quote] You truly have no idea how mutual funds work. I can tell. [/quote] You made my point. How many people do you think read what I wrote and actually researched it to see if what I said was true? I'd imagine that most who are unfamiliar with $1 million mutual fund breakpoints assumed what I said was accurate and thought nothing more of it. Imagine how easy it would be to deceive a group of 80 year-olds at a nursing home. Do you think they're actually going to follow up on an EIA salesman's statements or read the extremely confusing materials he gives them? Hence the hundreds of millions in lawsuits being filed against these guys. The bigger issue here is not whether an EIA is a security--it's not--but the tremendous need for a greater level of protection for investors. The state insurance boards are a complete joke, and if guys are going to stand up in front of a group of folks at the Golden Corral and give their opinion/advice about the stock market and how it will hurt them if they don't buy their product but change their lives if they do buy their product, they need a securities license. That's the issue. Maybe, just maybe, the idea that another group of people are now paying attention to how these guys are closing sales will help protect would be victims of predators. [/quote]You are a Jones broker. Enough said.
Stop saying that! I try not to think about it too often.
[quote=Borker Boy][quote=deekay][quote=Borker Boy]That’s a great question. I’m glad you asked.
Actually, I hate Mike Ditka, so he can keep his money. Let's talk about you, Butkus. I know you can scrounge up a piddly $1 million, and at that level, there will be NO sales charge--coming or going. NONE, ZERO, ZILCH. No 15%, fifteen year surrender penalties, no caps, no participation rates, no crazy crediting methods to have to contend with. Just 100% transparency. 1% CDSC in the first year. Forget about that one? 100% transparency? Really? Since when can you find out when a manager buys and sells something? How much a commission do they pay when they buy and sell? So, what's it gonna be, butt kiss?[/quote] You truly have no idea how mutual funds work. I can tell. [/quote] You made my point. How many people do you think read what I wrote and actually researched it to see if what I said was true? I'd imagine that most who are unfamiliar with $1 million mutual fund breakpoints assumed what I said was accurate and thought nothing more of it. Imagine how easy it would be to deceive a group of 80 year-olds at a nursing home. Do you think they're actually going to follow up on an EIA salesman's statements or read the extremely confusing materials he gives them? Hence the hundreds of millions in lawsuits being filed against these guys. The bigger issue here is not whether an EIA is a security--it's not--but the tremendous need for a greater level of protection for investors. The state insurance boards are a complete joke, and if guys are going to stand up in front of a group of folks at the Golden Corral and give their opinion/advice about the stock market and how it will hurt them if they don't buy their product but change their lives if they do buy their product, they need a securities license. That's the issue. Maybe, just maybe, the idea that another group of people are now paying attention to how these guys are closing sales will help protect would be victims of predators. [/quote] You still have failed to remark on how you feel the SEC will better protect the public from EIAs in light of their spectacular failure in the Madoff Ponzi scheme. Please provide examples of how state insurance boards are a "complete joke". The fact you put so much faith in the SEC's ability to protect "victims of predators" shows you have no concept of what is really going on with 151a.You’re missing the big picture (investor protection), and I’m failing to see the big deal about folks having to go and get a securities license if they’re going to discuss the market with prospects–regardless of whether what they’re actually selling is a security. If you’re going to discuss the stock market, you must meet minimum requirements in the form of obtaining a piddly little license.
How could anyone argue that an additional level of protection for investors--regardless of the Commission's current challenges--is bad? I'd be embarrassed to attach my name to anything that stated that I didn't want additional scrutiny on my business practices. Bring it on. Greed is the driving force in this business--look at your buddy Madoff, for example--and the predatory behavior must stop.Who says you need to speak at all about the market when you sell EIAs? I imagine (if I were able to sell them) my conversation with a prospect would go something like this:
deekay: "Mr./Mrs. Prospect, given your conservative nature, I would suggest a deferred annuity for your IRA rollover. This way, you are guaranteed to not lose money as long as you hold it for the length of the surrender period. We can go one of two ways: a traditional fixed annuity, which pays a set interest rate. Or, we can go with a equity-indexed annuity. It's returns are partially tied to the return of the SP500. The traditional fixed annuity offers a higher minimum rate of return. The equity-indexed annuity offers the potential for a higher rate of return than the traditional fixed annuity. Which is more important to you: a higher minimum, or a higher maximum?" Prospect: "__________________________" deekay: "Great, sign here." The reason so many people are up in arms about not wanting to get a securities license to sell EIAs is because THEY ARE NOT SECURITIES. Spare me the "oh, well, you manage to talk abou the markets, so you must get securities licensed." spin. I proved you don't need to wax poetic about the fluctuations in the market. What I will lobby for is additional training of reps on how these products work. Clients, advisors, and the media would all benefit as a result. The SEC is not going to provide that training, and we know they've shit the bed countless times when trying to "regulate" so what good is it going to be for EIAs to be registered products?[quote=Borker Boy]You’re missing the big picture (investor protection), and I’m failing to see the big deal about folks having to go and get a securities license if they’re going to discuss the market with prospects–regardless of whether what they’re actually selling is a security. If you’re going to discuss the stock market, you must meet minimum requirements in the form of obtaining a piddly little license.
How could anyone argue that an additional level of protection for investors--regardless of the Commission's current challenges--is bad? I'd be embarrassed to attach my name to anything that stated that I didn't want additional scrutiny on my business practices. Bring it on. Greed is the driving force in this business--look at your buddy Madoff, for example--and the predatory behavior must stop. [/quote]Porker, take off the ruby slippers and return to earth.
Deekay - Not saying you’re wrong - But I have a feeling that although one doesn’t necessarily HAVE to “wax poetic” about market fluctuations to pitch an EIA - I guarantee you 99% of people selling them DO (especially right now).
Not mentioning the 40%ish loss in equities in 2008 while selling a product guaranteed to not LOSE any money is like a lawyer withholding the best piece of evidence when trying to prove his case. Yeah they COULD do it, but they’re probably not gonna…
That being said, I think that there’s some truth to what Borker said about State Insurance Boards being kind of a joke. Some are fine, some are terrible, there’s just no consistency. More than anything, I think the problem stems from insurance being state regulated while securities are federally regulated. If, hypothetically, there was a federal insurance regulating agency of some sort, EIA’s wouldn’t need to fall under the SEC, IMO.
Aren’t you a secretary?
Apprentice, dick.
[quote=IndyJosh]Deekay - Not saying you’re wrong - But I have a feeling that although one doesn’t necessarily HAVE to “wax poetic” about market fluctuations to pitch an EIA - I guarantee you 99% of people selling them DO (especially right now).
Really? How many presentations on EIAs have you been witness to? Does a rep really have to educate a client as to what the market's been doing recently? Unless they've been living in a hole in the ground, they know the market's been crappy. Many of them want the pain to go away.Not mentioning the 40%ish loss in equities in 2008 while selling a product guaranteed to not LOSE any money is like a lawyer withholding the best piece of evidence when trying to prove his case. Yeah they COULD do it, but they're probably not gonna.... You CANNOT lose money in an EIA if you hold it past the full surrender period. Regardless of what the market does over that same time frame. A piece of advice: I would not pursue production if you can't get this fundamental down. I mean, between this misstep and the fact you refuse to prospect tells me you have ZERO chance of making it as a producer.
That being said, I think that there's some truth to what Borker said about State Insurance Boards being kind of a joke. Some are fine, some are terrible, there's just no consistency. More than anything, I think the problem stems from insurance being state regulated while securities are federally regulated. If, hypothetically, there was a federal insurance regulating agency of some sort, EIA's wouldn't need to fall under the SEC, IMO. Right, because the SEC has done such a bang-up job so far.
[/quote]
tomato, to-ma-toh. Fact is, you've already proven yourself to be clueless as to how this stuff really works. Deal with it.Apprentice, dick.
And unlike Josh, I am saying you're wrong.Deekay - Not saying you’re wrong - But I have a feeling that although one doesn’t necessarily HAVE to “wax poetic” about market fluctuations to pitch an EIA - I guarantee you 99% of people selling them DO (especially right now).
Not mentioning the 40%ish loss in equities in 2008 while selling a product guaranteed to not LOSE any money is like a lawyer withholding the best piece of evidence when trying to prove his case. Yeah they COULD do it, but they’re probably not gonna…
That being said, I think that there’s some truth to what Borker said about State Insurance Boards being kind of a joke. Some are fine, some are terrible, there’s just no consistency. More than anything, I think the problem stems from insurance being state regulated while securities are federally regulated. If, hypothetically, there was a federal insurance regulating agency of some sort, EIA’s wouldn’t need to fall under the SEC, IMO.
And unlike Josh, I am saying you're wrong.[/quote] Prove it. Don't worry - take your time. I've got lots of it.[quote=IndyJosh]Deekay - Not saying you’re wrong - But I have a feeling that although one doesn’t necessarily HAVE to “wax poetic” about market fluctuations to pitch an EIA - I guarantee you 99% of people selling them DO (especially right now).
Not mentioning the 40%ish loss in equities in 2008 while selling a product guaranteed to not LOSE any money is like a lawyer withholding the best piece of evidence when trying to prove his case. Yeah they COULD do it, but they’re probably not gonna…
That being said, I think that there’s some truth to what Borker said about State Insurance Boards being kind of a joke. Some are fine, some are terrible, there’s just no consistency. More than anything, I think the problem stems from insurance being state regulated while securities are federally regulated. If, hypothetically, there was a federal insurance regulating agency of some sort, EIA’s wouldn’t need to fall under the SEC, IMO.
[quote=deekay][quote=IndyJosh]
Really? How many presentations on EIAs have you been witness to? Does a rep really have to educate a client as to what the market’s been doing recently? Unless they’ve been living in a hole in the ground, they know the market’s been crappy. Many of them want the pain to go away.I’ve witnessed enough to know how the case is made for EIA’s in seminar. You telling me there’s nothing to be said to a client to promote EIA’s past “psst, the market’s down 40%.” Man, how do those guys stay in business the other 99% of the time that the markets didn’t just tank?.. You CANNOT lose money in an EIA if you hold it past the full surrender period. Regardless of what the market does over that same time frame. A piece of advice: I would not pursue production if you can't get this fundamental down. I mean, between this misstep and the fact you refuse to prospect tells me you have ZERO chance of making it as a producer.
I have ZERO concern about your speculations on my career.
Right, because the SEC has done such a bang-up job so far.
Read again, I said nothing about the SEC doing a flawless job - I simply said they're consistent across all states. I think that lack of consistency is a legitimate problem with insurance regulation, one which probably necessitated 151a. No?
[/quote] [/quote]
I'm sorry, but THATS FUNNY!!!! I think whoever mentioned state vs federal regulation really hit the nail on the head. [/quote][quote=deekay]Aren’t you a secretary?
The secretary hit the nail on the head.
The problem lies in a lack of education - of clients, advisors, and even regulators. You talk about “consistency” of regulation. What good is consistency if thr regulation is corrupt, short-sighted, and ineffective? But hey, as long as the crap-pattie has a consistent texture, it’s all good. Right?
Ice hit the nail on the head - investment reps feel threatened by EIAs. If their BDs allowed them to sell them or encouraged the sale of them, none of this conversation would be happening. Because the fact is, there is nothing inherently bad about EIAs. There can be a problem with how they’re sold. But because the magins to wirehouses are so slim on EIAs, they’re outlawed.
I find it somewhat strange that some of your guys’ BD’s don’t allow index annuities. My BD has their advisors list all non-variable insurance as outside business activity on our U-4.
This means, I can go out and find my own general agent for life insurance and go directly to the insurance companies for fixed and index annuity business. None of this passes through the BD, so I don't take any haircuts along the way.Last BD I worked for encouraged EIA’s as long as it wasn’t the craptastic Allianz Masterdex stuff. Dunno if this is the norm, but as a BD they treated EIAs as securities, and forced them through the grid.
Deekay, Yeah, just like most things, it ultimately boils down to an issue of $$$, more than consistency of regulation.
That being said, I think a lot of reps that’ve sold a VA in a non-resident state know that insurance being regulated on the state level is an outdated, sloppy method. How hard was it to get a non-res securities license added in that state? How hard was it to get a non-res insurance license?
Yeah, we all know how “slim the margins” are on 8, 9 10+% commission products. What wirehouse would want to touch that type of “slim margin”? Let’s see, 45% payout on a 3% commission Fixed Annuity - Great! 45% payout on 6-7% commission Variable annuity - Even Better! 45% payout on a 10% commission EIA - No way! That’s way too “slim”! LOL!!!
[quote=IndyJosh]Last BD I worked for encouraged EIA’s as long as it wasn’t the craptastic Allianz Masterdex stuff. Dunno if this is the norm, but as a BD they treated EIAs as securities, and forced them through the grid.
As a rep, it's hard to get excited for a commission that will get haircut. Case in point - I just placed a $60k fixed annuity for a client. My net payout is $1800. Compare that to a wirehouse. Gross payout is the same $1800, but after the grid at 50% (which is overly generous) it's $900. Compare that to an A share for the same client, $2400 commission, $1200 net payout. And people complain about greedy insurance salesmen....Deekay, Yeah, just like most things, it ultimately boils down to an issue of $$$, more than consistency of regulation. Aha! The truth comes out! There's little money to be had for the wirehouses in selling EIAs, so they shut it down. Now we're getting somewhere.
That being said, I think a lot of reps that've sold a VA in a non-resident state know that insurance being regulated on the state level is an outdated, sloppy method. How hard was it to get a non-res securities license added in that state? How hard was it to get a non-res insurance license? Straw man. Who said anything about easy of licensure? I can get licensed in each state pretty easily if I needed to. I'm licensed for insurance in several states. If a rep knows where to go, they can get it done pretty easily too. I like the idea of having state insurance commissions. I'm pretty fucking tired of centralized everything. I don't need big brother looking over my shoulder every second of every day.
[/quote]
That would require a 10-year CDSC. It's hard to imagine most reps selling that. From what I've heard, the standard is 5-7% CDSC. Usually 1% commission for every 1 year of surrender. But you probably knew that.Yeah, we all know how “slim the margins” are on 8, 9 10+% commission products. What wirehouse would want to touch that type of “slim margin”? Let’s see, 45% payout on a 3% commission Fixed Annuity - Great! 45% payout on 6-7% commission Variable annuity - Even Better! 45% payout on a 10% commission EIA - No way! That’s way too “slim”! LOL!!!
Deekay… I dunno if you’re picking apart my posts or just responding… but if I’m coming across as thinking I know everything or what not lemme know and I’ll, well, just stop posting I guess? Mainly because I assuredly have a fraction of the knowledge compared to vets in the industry, a group to which many of you probably belong. That being said, I learn a LOT from reading, and at least attemping to contribute something of value on a board like this… So… yeah.
PS: I’m guessing the states you got insurance licensed easily in weren’t Washington, Oregon, CA or NY, to name a few with month long queues and fingerprinting requirements, etc.
[quote=deekay]Who says you need to speak at all about the market when you sell EIAs? I imagine (if I were able to sell them) my conversation with a prospect would go something like this:
deekay: "Mr./Mrs. Prospect, given your conservative nature, I would suggest a deferred annuity for your IRA rollover. This way, you are guaranteed to not lose money as long as you hold it for the length of the surrender period. We can go one of two ways: a traditional fixed annuity, which pays a set interest rate. Or, we can go with a equity-indexed annuity. It's returns are partially tied to the return of the SP500. The traditional fixed annuity offers a higher minimum rate of return. The equity-indexed annuity offers the potential for a higher rate of return than the traditional fixed annuity. Which is more important to you: a higher minimum, or a higher maximum?" Prospect: "__________________________" deekay: "Great, sign here." The reason so many people are up in arms about not wanting to get a securities license to sell EIAs is because THEY ARE NOT SECURITIES. Spare me the "oh, well, you manage to talk abou the markets, so you must get securities licensed." spin. I proved you don't need to wax poetic about the fluctuations in the market. What I will lobby for is additional training of reps on how these products work. Clients, advisors, and the media would all benefit as a result. The SEC is not going to provide that training, and we know they've shit the bed countless times when trying to "regulate" so what good is it going to be for EIAs to be registered products? [/quote]If this is how your conversation would go, you would probably sell a lot of EIA's.
[quote=IndyJosh]Deekay - Not saying you’re wrong - But I have a feeling that although one doesn’t necessarily HAVE to “wax poetic” about market fluctuations to pitch an EIA - I guarantee you 99% of people selling them DO (especially right now).
Not mentioning the 40%ish loss in equities in 2008 while selling a product guaranteed to not LOSE any money is like a lawyer withholding the best piece of evidence when trying to prove his case. Yeah they COULD do it, but they’re probably not gonna…
That being said, I think that there’s some truth to what Borker said about State Insurance Boards being kind of a joke. Some are fine, some are terrible, there’s just no consistency. More than anything, I think the problem stems from insurance being state regulated while securities are federally regulated. If, hypothetically, there was a federal insurance regulating agency of some sort, EIA’s wouldn’t need to fall under the SEC, IMO.
[/quote]
You sure do a lot of thinking for a boy named Josh, who holds a girl’s job. Are there any Joshes over 19 years old?
And unlike Josh, I am saying you're wrong.[/quote][quote=IndyJosh]Deekay - Not saying you’re wrong - But I have a feeling that although one doesn’t necessarily HAVE to “wax poetic” about market fluctuations to pitch an EIA - I guarantee you 99% of people selling them DO (especially right now).
Not mentioning the 40%ish loss in equities in 2008 while selling a product guaranteed to not LOSE any money is like a lawyer withholding the best piece of evidence when trying to prove his case. Yeah they COULD do it, but they’re probably not gonna…
That being said, I think that there’s some truth to what Borker said about State Insurance Boards being kind of a joke. Some are fine, some are terrible, there’s just no consistency. More than anything, I think the problem stems from insurance being state regulated while securities are federally regulated. If, hypothetically, there was a federal insurance regulating agency of some sort, EIA’s wouldn’t need to fall under the SEC, IMO.
You are a Jones broker. Enough said.
[quote=Hank Moody] [quote=deekay]Who says you need to speak at all about the market when you sell EIAs? I imagine (if I were able to sell them) my conversation with a prospect would go something like this:
deekay: "Mr./Mrs. Prospect, given your conservative nature, I would suggest a deferred annuity for your IRA rollover. This way, you are guaranteed to not lose money as long as you hold it for the length of the surrender period. We can go one of two ways: a traditional fixed annuity, which pays a set interest rate. Or, we can go with a equity-indexed annuity. It's returns are partially tied to the return of the SP500. The traditional fixed annuity offers a higher minimum rate of return. The equity-indexed annuity offers the potential for a higher rate of return than the traditional fixed annuity. Which is more important to you: a higher minimum, or a higher maximum?" Prospect: "__________________________" deekay: "Great, sign here." The reason so many people are up in arms about not wanting to get a securities license to sell EIAs is because THEY ARE NOT SECURITIES. Spare me the "oh, well, you manage to talk abou the markets, so you must get securities licensed." spin. I proved you don't need to wax poetic about the fluctuations in the market. What I will lobby for is additional training of reps on how these products work. Clients, advisors, and the media would all benefit as a result. The SEC is not going to provide that training, and we know they've shit the bed countless times when trying to "regulate" so what good is it going to be for EIAs to be registered products? [/quote]If this is how your conversation would go, you would probably sell a lot of EIA's.
[/quote] Yes, this is very good and simple. I like it.
[quote=IndyJosh]Last BD I worked for encouraged EIA’s as long as it wasn’t the craptastic Allianz Masterdex stuff. Dunno if this is the norm, but as a BD they treated EIAs as securities, and forced them through the grid.
Deekay, Yeah, just like most things, it ultimately boils down to an issue of $$$, more than consistency of regulation.
That being said, I think a lot of reps that’ve sold a VA in a non-resident state know that insurance being regulated on the state level is an outdated, sloppy method. How hard was it to get a non-res securities license added in that state? How hard was it to get a non-res insurance license?
[/quote]
Did your old firm encourage the janitors, too, or was it just the secretaries?
Their business model was to have the receptionist girls get their 7s, and become super-producers, rather than chase already established reps. And I’m almost 30, not 19 - so therefore I basically know everything at this point.
And how has that worked out for them? How many salaried positions have become "super-producers"? Has their production justified the salaried expense and overhead associated to the hired help?Their business model was to have the receptionist girls get their 7s, and become super-producers, rather than chase already established reps. And I’m almost 30, not 19 - so therefore I basically know everything at this point.
And how has that worked out for them? How many salaried positions have become "super-producers"? Has their production justified the salaried expense and overhead associated to the hired help?[/quote][quote=IndyJosh] Their business model was to have the receptionist girls get their 7s, and become super-producers, rather than chase already established reps. And I’m almost 30, not 19 - so therefore I basically know everything at this point.
I was absolutely not serious. Quite the ability to pick apart an insanely ridiculous statement.
And how has that worked out for them? How many salaried positions have become "super-producers"? Has their production justified the salaried expense and overhead associated to the hired help?[/quote][quote=snaggletooth][quote=IndyJosh] Their business model was to have the receptionist girls get their 7s, and become super-producers, rather than chase already established reps. And I’m almost 30, not 19 - so therefore I basically know everything at this point.
I was absolutely not serious. Quite the ability to pick apart an insanely ridiculous statement.
[/quote] You're right. How crazy was I to think you would become a producer?
pretty… pretty… pretty… pretty crazy
"I find it somewhat strange that some of your guys’ BD’s don’t allow index annuities. My BD has their advisors list all non-variable insurance as outside business activity on our U-4.
This means, I can go out and find my own general agent for life insurance and go directly to the insurance companies for fixed and index annuity business. None of this passes through the BD, so I don't take any haircuts along the way. " Snags, it's all about the Benjamin's. They don't allow the sale precisely because it doesn't go through the B/D. The B/D still has the responsibility to supervise, but doesn't make any money. This is true with other things as well, but the commissions do make these easy products to abuse. The B/D simply doesn't want the headache without compensation. As for these products being "securities", if an EIA is a security, the same logic can be used to deem all fixed products "securities".anonymous,
You have the cart pulling the horse above. When a would-be EIA purchase “doesn’t go through the BD”, it’s because the BD doesn’t allow it to do so (in fact, forbids the sale to it’s FC’s). BDs could/can/and, some do, allow the sales of EIA’s and they do run through the grid. This whole “they’re not profitable enough for the BD” is foolishness. Unless you’re implying that they aren’t profitable enough to justify the potential legal liabilites that the BD would incur.
I actually agree with you YHWY. But I guess I don't really care about the issue since my BD allows me to use them as an outside business activity and I get full commission. Same thing with the fixed annuity. I'd like to ask you, since you're not a fan of them, I don't think, have you really taken the time to understand them?anonymous,
You have the cart pulling the horse above. When a would-be EIA purchase “doesn’t go through the BD”, it’s because the BD doesn’t allow it to do so (in fact, forbids the sale to it’s FC’s). BDs could/can/and, some do, allow the sales of EIA’s and they do run through the grid. This whole “they’re not profitable enough for the BD” is foolishness. Unless you’re implying that they aren’t profitable enough to justify the potential legal liabilites that the BD would incur.
Yes, I have. Here’s why I’m not a fan: EIA’s are fixed annuities. They should be expected to return traditional fixed-annuity rates of return. How does it benefit a client to accept a very long (usually about twice a tradition fixed annuity) surrender period which carries a very hefty CDSC schedule (in some cases around twice that of a traditional fixed annuity)? If a fixed annuity is an appropriate vehicle for a client, I believe that a traditional fixed does a better job of achieving the objective efficiently. Just my opinion.
Ok. One of the companies I like has an index annuity with a 5 year contract and a fixed annuity with a 6 year contract. They both pay the same. The surrender charge is a little higher for the index annuity. So, I'm not incenticized by commission, just presenting both to a client and letting them choose. Seems like a win-win to me. Thank you though for at least looking at them before coming on here and dissing something you don't know about. Too many pikers here do that.Yes, I have. Here’s why I’m not a fan: EIA’s are fixed annuities. They should be expected to return traditional fixed-annuity rates of return. How does it benefit a client to accept a very long (usually about twice a tradition fixed annuity) surrender period which carries a very hefty CDSC schedule (in some cases around twice that of a traditional fixed annuity)? If a fixed annuity is an appropriate vehicle for a client, I believe that a traditional fixed does a better job of achieving the objective efficiently. Just my opinion.
[quote=anonymous]"I find it somewhat strange that some of your guys’ BD’s don’t allow index annuities. My BD has their advisors list all non-variable insurance as outside business activity on our U-4.
This means, I can go out and find my own general agent for life insurance and go directly to the insurance companies for fixed and index annuity business. None of this passes through the BD, so I don't take any haircuts along the way. " Snags, it's all about the Benjamin's. They don't allow the sale precisely because it doesn't go through the B/D. The B/D still has the responsibility to supervise, but doesn't make any money. This is true with other things as well, but the commissions do make these easy products to abuse. The B/D simply doesn't want the headache without compensation. As for these products being "securities", if an EIA is a security, the same logic can be used to deem all fixed products "securities".[/quote]The b/d does not have the responsibility to supervise. The broker only has to report that he's selling fixed annuities on the OBA Disclosure form, once a year. He does't have to have the firm look at any paperwork.
Hank, I’m probably using the wrong choice of words. Let me ask a question. It’s not rhetorical. If a registered rep is screwing 80 year olds by selling them EIAs with a 50 year surrender charge that doesn’t get waived at death, does the rep’s B/D have any responsibility?
[quote=YHWY]
Yes, I have. Here’s why I’m not a fan: EIA’s are fixed annuities. They should be expected to return traditional fixed-annuity rates of return. How does it benefit a client to accept a very long (usually about twice a tradition fixed annuity) surrender period which carries a very hefty CDSC schedule (in some cases around twice that of a traditional fixed annuity)? If a fixed annuity is an appropriate vehicle for a client, I believe that a traditional fixed does a better job of achieving the objective efficiently. Just my opinion.
[/quote]
The way fixed rates are right now, it’s much more likely that the client will do up to 50% better in an index annuity. The hefty surrender schedule is in place because the client pays NOTHING up front, in the way of a commission. If he leaves it alone for the entire contract period, he will NEVER pay a commission. Since EIA’s only pay interest during up years, it stand to reason that the more years in the contract, the more up years there will be, and the more likely the average return will be rather high for a principal guaranteed product.
I can’t believe that you can’t think through this on your own. You should try not to hate things until your really understand them.
[quote=anonymous]Hank, I’m probably using the wrong choice of words. Let me ask a question. It’s not rhetorical. If a registered rep is screwing 80 year olds by selling them EIAs with a 50 year surrender charge that doesn’t get waived at death, does the rep’s B/D have any responsibility?[/quote]
No, but in this litigious society, it wouldn’t stop some asshole lawyer from trying to extort money from the firm, anyway.
Have you ever seen the annuity disclosure forms, suitability forms or the statements of understanding that must be reviewed with the client? If you send me your email address, I’ll send some your way. You’d be quite surprised. They are quite comprehensive and tedious.
I haven’t seen the forms since I can’t sell the products. I’m sure that your asshole lawyer scenario is a big reason why they can’t be sold by reps of some B/D’s. Why would a B/D want to deal with this if they aren’t making any money?
Also, it is an outside business activity, but it's not an outside business in the same way as a weekend bartending gig is outside business. "Mr. Client, let's put $500,000 into this mutual fund and $250,000 into this EIA. Here's why..." It just seems to me that the B/D would have some responsibility, at least if the products are being sold to security clients. That being said, it still makes no sense for these contracts which are fixed annuities to be registered. It's nothing more than a powerplay/financial grab.Hank,
As you well know, I’m more than capable of thinking these things through on my own. I simply disagree with your assessment of traditional fixed vs EIA’s. There is no “hate” involved.
I’ve grown tired of the “disagreement”=“hate” mantra that’s grown so pervasive today.
And, just by way of evidence, here are the current specs. on an annuity solution that I believe offers an attractive option for very risk (of principal) and uncertainty (i.e. about rates of return) averse clients:
MetLife – Fixed Annuity FA 800-848-3854
Rate Structure: 5.75% for 5 years (Note: rate dropping to 5.10% on 12/17/08)
CDSC: 7,6,5,4,3%
Minimum Deposit: $25,000
[quote=YHWY]And, just by way of evidence, here are the current specs. on an annuity solution that I believe offers an attractive option for very risk (of principal) and uncertainty (i.e. about rates of return) averse clients:
MetLife – Fixed Annuity FA 800-848-3854
Rate Structure: 5.75% for 5 years (Note: rate dropping to 5.10% on 12/17/08)
CDSC: 7,6,5,4,3%
Minimum Deposit: $25,000
[/quote]
There’s nothing wrong with this product. It’s perfect for someone who wants to know what will happen every year. Index annuities are for people who want to take a shot at doing better than the fixed annuity. Just because we think something’s best, doesn’t mean that it is what the client likes the best. Show them both products, let them pick what they want, and the deal is done.
[quote=YHWY]Hank,
As you well know, I’m more than capable of thinking these things through on my own. I simply disagree with your assessment of traditional fixed vs EIA’s. There is no “hate” involved.
I’ve grown tired of the “disagreement”=“hate” mantra that’s grown so pervasive today.
[/quote]
I hate the taste of all seafood, but that will not stop me from going fishing with you.
Cool! More fish for me and more EIA business for you.
Just was at a convention where CEO of American Equity spoke for about an hour… after hearing her I’m pretty certain this thing’s gonna get overturned.
^^^^^ Prolly not gonna do that… ^^^^^^
Anyway. Dunno if it was talked about, but the law firm hired by american equity and the other 4 companies that’ll be named plaintiffs has had previous experience winning cases against SEC, and the attorney is actually supreme court judge Scalia’s son I think I remember hearing.
Either way, she was really optimistic about it being overturned, giving all sorts of reasons why, etc… just thought I’d share!
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