Back in Action

Posted by Ray on June 27, 2009 under Main | Be the First to Comment

It has been awhile since there has been a post, sorry. Things have been complex in the annuity and financial services industry as a whole. Not only that, but how many times need you read Annuity posts. Therefore, we are changing our format and moving to a more general blog about the markets, financial services and annuities.

We also wanted to comment on some comments about why we dislike index annuities. Many have said that you cannot hate a product based on higher commissions alone. You are correct. Our point about higher commissions is just on aspect of why we dislike these products. The simple fact is that if the company can afford to pay the agent 8%+ in commissions and then pay a “bonus” to contract holders, a potential outlay of between 16 to 20% of capital by the insurer upfront, it is unreasonable to assume that the product is in the best interest of the consumer. Debate that fact all you want, but that tyope of capital outlay comes with strings, period.

This is why we support Rule 151A which requires index annuities to be regulated by the SEC. Sure the SEC has messed up, but that is with hedge funds and not annuity products, where they have done a decent job of regulating the products. Unfortunately, some greedy congressmen are fighting the new rule citing states rights, etc. However, I am sure they are merely receiving campaign contributions to fight the rule rather than actually trying to understand what and why the SEC wants this power.

Blast away, but the fact is that it is the best possibility for insurers to be honest and the product to actually benefit all parties involved instead of the traditional method of only being really good for the agent and the company. Everyone needs to make a living, but stop screwing the little guy and we will be OK. Here is a hint, take care of your clients and they will take care of you.