Insurance Agent Forum

[Freddie]

Hmmm...securities firm lose clients 40 to 55% and charge 2% a YEAR on AUM while most EIAs have not lost a penny, This proposed law is serious and will actually harm consumers.

With Alex Sink and Charlie Crist - who needs Democrats like the Kenyan-born marxist.

http://www.888fairlane.com/site/s/announce/urgent.pdf

Subject:

URGENT- Pending legislation in Florida that has the ability to completely halt annuity sales

PLEASE take a minute to read over the attached materials.
The state of Florida is attempting to pass Senate Bill 1372 very quickly and pretty quietly.

It has plenty of merit, but it also has the potential to be very damaging. Most notably,

Florida regulators
Are attempting to limit surrender charges on annuities to five years, with a maximum surrender
Charge of 5% for consumers aged 65 and over.

According to the U.S. Census Bureau, Florida is the fourth most populous state in the nation, and the single
Most inhabited state for persons aged 65+. Nearly 20% of our country’s senior population lives here, which
Means that millions of seniors who need the safety and guarantees of annuities may soon lose access to these
Valuable products.

Why? The shorter the surrender charge, the lower the rates on the annuity. In addition, shortening the
Surrender charge means lowering agent commissions. Not to mention the fact that if surrender charges are
Limited to five years/5%, no premium bonuses will be available on these products, as you cannot price a
Bonus into a 5-year chassis. Independent agents and their Field Marketing Organizations (FMOs) must
Receive enough compensation on the product to offset their costs, and make it worth their while- plus the
Rates on the product must be competitive with other safe money places (such as Certificates of Deposit). If
The product cannot fulfill those needs, the product will not even be offered. Insurance companies distributing
Through independent agents will not take the time to develop such products.

To help you gain some perspective, the average indexed annuity today has a ten-year surrender charge, a 5%
Premium bonus, and pays 6.85% commission to the agent (this does not include overrides to the FMO).

Ultimately, if this bill passes, annuities will most likely only be available through banks and broker dealers
Who will be inclined to sell competing products with higher rates and higher compensation (such as CDs or
Mutual funds).

AND, keep in mind that Florida is notorious for disseminating false information about annuities to their
Residents. Their public “equity indexed annuity alert” has over 23 misstatements or falsehoods about indexed
Annuities ranging from “[surrender charges] can be as high as 25% and last as long as 20 years” to “…
Bonuses are often illusory, and are seldom paid up-front.” This proposed bill perpetuates the falsehoods with
Comments such as “[the annuity] has the effect of denying the senior consumer access to his or her assets for
The most of the rest of the consumer’s life.” THESE ARE OUTRIGHT LIES! No indexed annuity has
Surrender charges of 20 years, or up to 25%! Exactly 93% of all indexed annuities with bonuses have an upfront
Bonus with no requirements to annuitize or take lifetime income! Every indexed annuity allows for
10% withdrawals of the cash value annually without penalty, and 95% of the products also allow for
Penalty-free withdrawals in the event triggers such as terminal illness, nursing home confinement, and even
Unemployment!

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PLEASE help me!

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We need to ensure that this bill does not get enacted. I am forwarding this
Information to all of my press contacts, my home office contacts, and many FMOs. Forward this email.
Write articles about this and post them immediately. Call your legislators! Get trade groups like the NAIC
And the ACLI involved! Let’s make a difference, and protect the seniors that need our help more now than
Ever! SB 1372 only hurts Florida seniors and radically limits their retirement preservation options. Who else
Will protect their retirement income in such a tumultuous market?

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Contact the regulators in Florida to let them know that you DO
NOT SUPPORT SB 1372, and it will harm the Florida residents that

they are attempting to protect!
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[insuranceexec]

The federal gov't is in the private banking business now; did you not get the memo? By limiting the performance of annuities; it makes their dismal CD's look better in comparison. Hence jump starting the banking industry; making their ivory towers even taller.

What ever happened to the idea of actually earning your customers business; as opposed to scaring them to action? Is this not called a scare tactic?

I guess you will always have the "tax deferred" benefit; or maybe that will be next to go..........I hope this helps.....

[Freddie]

Originally Posted by insuranceexec

The federal gov't is in the private banking business now; did you not get the memo? By limiting the performance of annuities; it makes their dismal CD's look better in comparison. Hence jump starting the banking industry; making their ivory towers even taller.

What ever happened to the idea of actually earning your customers business; as opposed to scaring them to action? Is this not called a scare tactic?

I guess you will always have the "tax deferred" benefit; or maybe that will be next to go..........I hope this helps.....

There is more. I did a quick look up on the bill. The co-author's name is Mike Fasano and he is a broker at Morgan Stanley. Asst VP. Can you say conflict of interest?

Morgan Stanley clients probably lost 40 to 50% in the last 12 months while EIA owners lost nothing. MS almost went under due to bear raids by shorts. MS essentially got bailed out.

[insuranceexec]

There is always more to the story..........................LOL. Sad but true.....

[SmartMoney]

This is criminal, how could less options/competition be in the consumers best interest?

[Freddie]

Originally Posted by SmartMoney

This is criminal, how could less options/competition be in the consumers best interest?

Brokerage customers lose 40 to 50% while EIA customers lost nothing.

Brokerage managed accounts at 1.5% management fee plus hidden fees like transaction costs over say 10 years equal 20% in fees. A senior who would bail on a 14-year annuity in say 5 years might have an 8% fee?

This bill and other states bills are design to protect the securities industry and banks.

Morgan Stanley was actually a good investment bank over a decade ago before Dean Witter bought them. They almost imploded trhis fall of 2008 and John Mack CEO of MS had to beg the treasury because the shorts were killing them. Their credit default swaps had skyrocketed. Goldman Sachs did the same begging to stop the hedge fund shorts.

This is after MS and GS were lending money and doing the trades for short hedge funds to wipe out the banks.

Insurance companies are not perfect but Madoff is the poster boy for most of the securties industry.

[djs]

Brokerage managed accounts at 1.5% management fee plus hidden fees like transaction costs over say 10 years equal 20% in fees. A senior who would bail on a 14-year annuity in say 5 years might have an 8% fee?

Are you saying there aren't any fees built into the annuity? Probably need to go back and check on this.

You're point is well taken, but be factual. Annuity fees can be a bit high.

You have mortality and expense fees, which I think average 1.15%
You have surrender charges, which do diminish over time.
You have management fees, which in 1997 averaged 0.87%

All that said, I agree the AUM charge of 1.5% is over the top, but its so much better than paying a one time sales charge.... those commission guys are out to churn and burn you... ooops, get of my sarcastic soap box now...

Dan

[briko3]

What many of the legislators don't realize is that in FL, you can annuitize an annuity after 5 years with no penalty. Hence the reason the state insurance commissioner isn't the one that came up with the bill.

[SmartMoney]

Originally Posted by djs

Are you saying there aren't any fees built into the annuity? Probably need to go back and check on this.

You're point is well taken, but be factual. Annuity fees can be a bit high.

You have mortality and expense fees, which I think average 1.15%
You have surrender charges, which do diminish over time.
You have management fees, which in 1997 averaged 0.87%

All that said, I agree the AUM charge of 1.5% is over the top, but its so much better than paying a one time sales charge.... those commission guys are out to churn and burn you... ooops, get of my sarcastic soap box now...

Dan

The other consideration is the fixed annuity (which will also suffer by this bill due to the condensing of surrender period/charges) which many really doesnt contain fees... This bill is not very well thought out...

[JMO Fan]

FL has never adopted the NAIC Model law requiring minimum values for annuities. It's the Standard Nonforfeiture Law for Deferred Annuities, which includes the 3% long-term interest crediting requirement. FL is one of only two states that hasn't adopted that standard; maybe they're trying to fill in the gap.

[indaville]

Originally Posted by SmartMoney

This bill is not very well thought out...

When are they ever, well thought out?!

Matt