By Bill Broich
- How would you feel if France suddenly announced they would be monitoring the US Military?
- How would you feel if your neighbors told you they would be supervising your children?
- How would you feel if your bank announced it would have to approve your spending?
I wouldn’t put up with that for a second, would you?
Well it has happened to our segment of the insurance industry: the Financial Regulatory Authority Inc. (FINRA) is paying close attention to how and when investors are exchanging variable annuities for other products, such as indexed annuities. FINRA (www.finra.org) is the security industry watchdog whose goal is to safeguard investors and protect them against wrong doing.
But wait, FINRA only regulates and marshals security brokers and security companies. Our insurance industry is overseen by each State Department of Insurance and it has always has been that way. How would FINRA feel if the Department of Insurance in California announced they would be investigating mutual fund sales?
Absurd and overreaching. FINRA does exactly what they were designed to do, assist the securities industry professionals though education and overseeing security activities. There has long been a separation between FINRA and each State Department of Insurance but now their fingers are slipping around our industry and I wonder why?
Could it be that people are fed up with how the security industry is managed and overseen? Could it be because the fees associated with security sales are obscene? Could it be many folks just want safety and security and a comfort their funds won’t disappear with broker fees and expenses?
The simple fact FINRA even has an interest in our insurance products is alarming. Could it be the administration wants to end as many states’ rights as possible and make sure the only ones really in control are the Feds?
I am not sure of the answer but my guess is probably not far off. I think that Fixed Indexed Annuities are the future for the Baby Boomers and not having control over that product means loss in revenue for FINRA and once again they will try their hardest to wiggle into our world.
Three years ago we had to fight them off when they attempted to introduce 151a, which would have granted control over Fixed Indexed Annuities by having them designated a security. How can an insurance product with no risk, no downside and full of safety and security provisions even be considered as a security? FINRA was over reaching then, just as it is now.
Fortunately clear heads prevailed and it was defeated. But still they come, and still they want to get their grimy hands on our industry.
Ask yourself why? I think the answer is as I have stated: money. They see control over what will be the biggest sector of the annuity industry will be a huge financial landfall, and they want it.
There has been almost no situation where our products have been abusive or where security licensed brokers have used them incorrectly. What is at stake is money, money being shifted from the industry leading product, variable annuities (securities) to insurance issued produced. The Baby Boomers are coming to our products and the security industry cannot stand to be left out, so here comes the white horse, a white horse known as FINRA.
In the article link above is reported that FINRA is concerned about product design and making sure disclosure is fully represented. I assume they want a 600 page prospectus just so the Baby Boomers can read until they fall asleep. FINRA is completely off base here and needs to crawl back into their cave.
Our industry can take care of itself without the help of an over budgeted lobbyist driven conglomerate hiding behind the word “disclosure”.