Insurance Agent Forum

[URDRWHO]

FINRA, those folks that like to monitor all activities to prevent misleading statements from brokers....ah now have a look at this. It is from their own site.

FINRA - Investor Information - Investor Alert - Equity-Indexed Annuities—A Complex Choice

"Is it possible to lose money in an EIA?
Yes. Many insurance companies only guarantee that you'll receive 90% of the premiums you paid, plus at least 3% interest. Therefore, if you don't receive any index-linked interest, you could lose money on your investment."

Ok here is the rub. What they want to say is, insurance companies pay the minimum guaranteed rate on 90% of the premiums. Maybe I've been hiding under a rock but I am not aware of an FIA that aside from the surrender charge, will keep 10% of your money. Their statement does sound like you can/will only get 90% of the premiums you paid.

I've made a copy of this and will be making it part of my rebuttal to the SEC. Plus I am sending a copy of it to my legal guy. Perhaps he will send a letter to them discussing misleading statements.

Maybe there is an insurance company out there that will keep 10% but many....I don't think so.

Now if a Reg Rep would have made such a statement they would be writing a check to the FINRA arbitration board today. Paying the fine. But the folks that are above you can make mistakes and get away with it. Funny how that works.

[djs]

I'm confused. You agree with them (i.e., surrender charges) and then proceed to disagree with them.

On the same page, they will make you happy, they say:
"What is the Guaranteed Minimum Return?

The guaranteed minimum return for an EIA is typically 90% of the premium paid at a 3% annual interest rate. However, if you surrender your EIA early, you may have to pay a significant surrender charge and a 10% tax penalty that will reduce or eliminate any return. "

I think I view this differently than you do. On EIA's, there is no way for you to tell me exactly what I'll have at any given time, if I make regular payments. You can do this with a fixed annuity, but not with an EIA or a VA.

I don't know that they need the scrutiny and control that other security products do, but they need the same level of suitability testing, which is what is lacking in most of the annuity market today. Given the rate of return on most fixed annuities, this wasn't such an issue, but on a EIA, people are advertising these differently (and somewhat inappropriately), putting them more in the limelight for scrutiny.

Dan

[JMO Fan]

FINRA's not misleading. Many EIAs only give 3% on 90% of premium. You're trying too hard.

Painting FINRA as evil is not likely to impress the SEC.

[URDRWHO]

It is misleading because it is on their public investor alert site. We know what they mean but with language like this it is misleading. How is this a loss.........

"Is it possible to lose money in an EIA?
Yes. Many insurance companies only guarantee that you'll receive 90% of the premiums you paid, plus at least 3% interest."

Plus it is NOT "you'll receive 90% of the premiums you paid." It is, you'll receive 3% on 90% of the premiums.

Look when I am reading a P&C contract the devil is in the details. If the additional insured status does not allow waiver of right of recovery by written contract, it means it. Those two words "does not" adds a lot of meaning.

Attorneys will sweat over where and how a comma is used. It is you that is trying too hard to give them a pass.

I can guarantee you that if they had that language when they tried to get the ok from my State Department, it would not have been approved. How do I know? I just got off the phone with the Dept. of Ins. in product filing. You do this stuff long enough you get to have direct phone numbers that bypass the pick one for this, two for that.

I've talked to legal in two different insurance companies and they are rather miffed at the language. I'm waiting for a return call from someone at NAIC.

SO apparently so far, JMO is the only one that doesn't have a problem with it. Hm why is that?

[healthagent]

Again, because your ethics are so high you don't realize that many agents selling annuities are saying things like "no risk."

Statements like "no risk" are what's putting this all in the lime light.

I spoke with an agent selling EIA's yesterday and we got into a bit. He stuck to his guns:

"All the benefits of participating in the market without any of the risks" is verbatim what he told me.

Really? ALL the benefits of participating in the market without ANY risk?

That was his training so that's what he spews out like verbal diarrhea.

Hmmmm....with all the of benefits of being in the market without any risk - begs the question of why everyone doesn't have an annuity.

[URDRWHO]

To me the real risk is inflation risk. Which at this current time is a risk that is almost unmanageable.

What risks do you see in the FIA?

Hey and FIA based on the commodity market.

I saw an FIA that gives you 10% of the down market as a positive return. Market is down 30% and they will credit +3%. They better be very good at bull & bear straddles and spreads. In 1981 to 1984 I was S3 licensed so I do understand about puts, calls, hedging, etc. It isn't an easy thing to guess it correctly.

To answer your question, "why isn't everyone in one?" I think as the boomer's are coming to that age, people will / are moving into products that have less risk than the market. Especially when portfolios have seen a 20% decline since Jan 1 -2008. We are entering a time of more importance to the return of my money than the return on my money.

You better believe that the big wirehouses, in their future business plans, meeting have already guessed it.

Originally Posted by healthagent

Again, because your ethics are so high you don't realize that many agents selling annuities are saying things like "no risk."

Statements like "no risk" are what's putting this all in the lime light.

I spoke with an agent selling EIA's yesterday and we got into a bit. He stuck to his guns:

"All the benefits of participating in the market without any of the risks" is verbatim what he told me.

Really? ALL the benefits of participating in the market without ANY risk?

That was his training so that's what he spews out like verbal diarrhea.

Hmmmm....with all the of benefits of being in the market without any risk - begs the question of why everyone doesn't have an annuity.

[healthagent]

I'm with you - not against you. So a senior with $500,000 in a fund needs to access that money but OOOPS.....it's down 35% so tough luck.

They also do not have the needed time to recover from such a dip. That's where seniors need some very solid advice.

I also see the irony of a senior in a mutual fund being told it's 10 years to see the gains yet annuities get hammered.

CDs may also not be the answer - could take a loss after adjusting for inflation.

It's a shame annuities are marketed by just a very few unethical agents....giving the industry as a whole a bad wrap.

Let me ask you - just how was "annuity university" allowed to run? What....the carriers didn't know about it? Ummm....right.

But they closed their eyes and ears and that turned out to be a mistake.

Again "word on the the street" is powerful. Make an example of someone. Find an agent who simply ravaged a senior and crucify him - dropped appointment - loss of license and possible criminal charges.

Let that word spread and see if the very few rotten apples don't say "ummm I'm out."

[URDRWHO]

What was annuity university? Was it the marketing thing the Dateline guy was doing?

My father in law, age 76 was in a closed end mutual fund. He was in it for about 15 years, maybe less. It threw off about 10% a year and was a mortgage based fund.

A few months ago the fund manager contacted him and said:

"we hope to have your principal back in 2 years, maybe more but the income won't be happening. It was $450,000.

Ouch!

Originally Posted by healthagent

I'm with you - not against you. So a senior with $500,000 in a fund needs to access that money but OOOPS.....it's down 35% so tough luck.

They also do not have the needed time to recover from such a dip. That's where seniors need some very solid advice.

I also see the irony of a senior in a mutual fund being told it's 10 years to see the gains yet annuities get hammered.

CDs may also not be the answer - could take a loss after adjusting for inflation.

It's a shame annuities are marketed by just a very few unethical agents....giving the industry as a whole a bad wrap.

Let me ask you - just how was "annuity university" allowed to run? What....the carriers didn't know about it? Ummm....right.

But they closed their eyes and ears and that turned out to be a mistake.

Again "word on the the street" is powerful. Make an example of someone. Find an agent who simply ravaged a senior and crucify him - dropped appointment - loss of license and possible criminal charges.

Let that word spread and see if the very few rotten apples don't say "ummm I'm out."

[healthagent]

no - not Dateline

Read this

http://aging.senate.gov/events/hr179ls.pdf

[healthagent]

And after reading that, maybe now you can see what the problem is.

[healthagent]

URDRWHO - I can only surmise by your lack of response after reading that PDF that you're finally realizing just how filthy the annuity industry can be.

And that the carriers knew "Annuity University" existed and didn't nothing to shut it down brings you more into the realization that this industry is incapable of self-policing.

Again, all analogies to health are mute. This country will not allow seniors to be screwed - and as you can clearly read, an entire annuity training course we set up to do just that.

[padthaiforlunch]

And yet the SEC does such a great job of policing its own that it takes the AG's office to step in on Bear Stearns Hedge Fund managers, whose lying to investors caused about about $1.6 billion in investor losses.

Shorter FINRA to SEC:

I want his happy meal, too!

[Mr. Bill]

Annuity University = Tyrone Clark and Broker's Choice

[URDRWHO]

NoI have not read the PDF. Today is a holiday and I have been out playing. But I will check it out.

Originally Posted by healthagent

URDRWHO - I can only surmise by your lack of response after reading that PDF that you're finally realizing just how filthy the annuity industry can be.

And that the carriers knew "Annuity University" existed and didn't nothing to shut it down brings you more into the realization that this industry is incapable of self-policing.

Again, all analogies to health are mute. This country will not allow seniors to be screwed - and as you can clearly read, an entire annuity training course we set up to do just that.

[URDRWHO]

Well how do you feel about MEGA health policies or the NASE?
They used to sell, maybe still do, polices to people without informing them that they needed a chemo rider, an outpatient rider, etc. Maybe the SEC should be moving in on their horse to save people from bad health marketing.

IMHO organizations such as NASE, Primerica, et. al. that have a main focus on recruitment are not always the most healthy environment for ethics.

Twenty years ago I had a client that was being courted by Merrill (I was still a reg rep licensee). The Merrill guy was selling them on Kingdom of Sweden bonds and was giving very inflated figures. I tried to explain to them about currency risk, etc. but they didn't listen. The siren song of big money got them. Now the story didn't end drastic but the returns were not anywhere in the vicinity of what the Merrill rep was telling them. Believe me, the SEC & FINRA do not do one darn thing to stop someone from bending the truth. What it does do is make life miserable for ethical to do business.

I'm the same guy that was ranting several months ago about the bait and switch used in life insurance quoting by some agents. There are days I feel like I am in the sharks tank and me without under ware.

Originally Posted by healthagent

URDRWHO - I can only surmise by your lack of response after reading that PDF that you're finally realizing just how filthy the annuity industry can be.

And that the carriers knew "Annuity University" existed and didn't nothing to shut it down brings you more into the realization that this industry is incapable of self-policing.

Again, all analogies to health are mute. This country will not allow seniors to be screwed - and as you can clearly read, an entire annuity training course we set up to do just that.

[healthagent]

Does Mega Life target seniors?