In closing I would like to say as insurance agents we need to work together to stop more government intrusions on our business. It isn't a big leap for the government to say FIAs need to be regulated by the SEC or FINRA and for them to say so does UL. Next comes whole life and you can bet health insurance is on its way.
SEC says FIA's are securities!!
- Thread starter indaville
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- 14,808
You confusing theory with reality.
The theory is that there are unethical agents in all areas of insurance so why don't we impose tighter restrictions on health insurance agents too.
The reality is the annuity industry is currently under fire and solid annuity agents could be greatly harmed if the proposed changes take effect.
You can rattle on about all other areas - it's a bit like being pulled over for speeding and telling the cop "you can't write me a ticket because everyone else is speeding too."
Annuities are getting a ticket and it doesn't matter that health insurance is also speeding.
So the annuity carriers will either adopt some type of internal policing to get rid of the few unethical agents or watch their industry go in the crapper.
The theory is that there are unethical agents in all areas of insurance so why don't we impose tighter restrictions on health insurance agents too.
The reality is the annuity industry is currently under fire and solid annuity agents could be greatly harmed if the proposed changes take effect.
You can rattle on about all other areas - it's a bit like being pulled over for speeding and telling the cop "you can't write me a ticket because everyone else is speeding too."
Annuities are getting a ticket and it doesn't matter that health insurance is also speeding.
So the annuity carriers will either adopt some type of internal policing to get rid of the few unethical agents or watch their industry go in the crapper.
If FINRA & the SEC have their way.....I guess indexed life insurance needs to be a registered product.
I would say that if we are selling an HSA that allows the account to be invested in mutual funds, therefore it should be a registered product. After all, the person selling insurance could make mention of the ability to invest the HSA account in mutual funds. It isn't a far throw for FINRA to have their way with us on HSA business.
I doubt if we will see them attacking HSA business because the wirehouses don't want that business.
I would like to see a study detailing the harm that has been done to people. Compare that to the $billions in premiums that have been collected. I'm going to guess that the complaint/problem portion is smaller than the gnat on the elephants back. Those decision makers need to find and present the study.
I will be requesting to comment during the public comment period. I've stood up the powerful before and laid them low. I remember giving my talk before a bank of seven Brooke's Brothers suited attorneys. I left them there sitting on their thumbs without a thing to say. Really, I often find that the people in power are often oblivious to facts and only pontificate urban legends.
Why did NASD change its name to FINRA? FINRA (NASD) was never to have a monopoly SRO. If I get to comment, I will want to ask the monopoly question and has the Corp. ever been audited? Personally I feel more at ease working under the SEC than FINRA. For the years I was an RIA I found it was much easier to work with my State SEC.
The SEC must answer to someone, who does FINRA answer to?
I would say that if we are selling an HSA that allows the account to be invested in mutual funds, therefore it should be a registered product. After all, the person selling insurance could make mention of the ability to invest the HSA account in mutual funds. It isn't a far throw for FINRA to have their way with us on HSA business.
I doubt if we will see them attacking HSA business because the wirehouses don't want that business.
I would like to see a study detailing the harm that has been done to people. Compare that to the $billions in premiums that have been collected. I'm going to guess that the complaint/problem portion is smaller than the gnat on the elephants back. Those decision makers need to find and present the study.
I will be requesting to comment during the public comment period. I've stood up the powerful before and laid them low. I remember giving my talk before a bank of seven Brooke's Brothers suited attorneys. I left them there sitting on their thumbs without a thing to say. Really, I often find that the people in power are often oblivious to facts and only pontificate urban legends.
Why did NASD change its name to FINRA? FINRA (NASD) was never to have a monopoly SRO. If I get to comment, I will want to ask the monopoly question and has the Corp. ever been audited? Personally I feel more at ease working under the SEC than FINRA. For the years I was an RIA I found it was much easier to work with my State SEC.
The SEC must answer to someone, who does FINRA answer to?
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- 403
The SEC, not FINRA, proposed the rule to make EIAs (and probably EI UL) regulated as securities. The SEC said indexed products were securities 20+ years ago, so this is a small step for them. If they didn't act, federal courts would probably force them to.
The logic SEC applies in the proposed rule would also force securities regulation on all deferred annuities, UL, and excess interest WL. They appear to want to leave as much regulation as possible to the state insurance depts. However, FINRA will still be administering the exams necessary to get a license to sell indexed products, and prospectuses would seem to be required, along with other disclosure required now of variable annuities.
The logic SEC applies in the proposed rule would also force securities regulation on all deferred annuities, UL, and excess interest WL. They appear to want to leave as much regulation as possible to the state insurance depts. However, FINRA will still be administering the exams necessary to get a license to sell indexed products, and prospectuses would seem to be required, along with other disclosure required now of variable annuities.
That's my point. I believe as an industry we have to stand up to FINRA and the SEC. We are a state regulated industry and as soon as that changes every line of insurance will become at risk for intrusion. That is reality.
What happens when FINRA or the SEC or the National Office of Insurance decides life insurance companies can only sell term life insurance? Or that the feds decide car insurance companies can only pay 7.5% commission? Or that health insurance agents shouldn't be able to collect renewals because we quite frankly know health agents have little service work to do once the plan has been delivered?
The real problem is that seniors are being lead to believe more and more by FINRA and the AARP that nothing bad will happen to them while FINRA and AARP are policing the financial world. The trouble is that no matter how many regulations and registrations and no matter how many hoops agents will have to jump through bad apples will get through and unsuspecting seniors that believe FINRA has regulated everyone will be left holding the bag.
John,
I love the speeding analogy. However, FINRA and the SEC won't stop the crooks. They haven't stopped crooks in the securities industry. This isn't to say that insurance companies can't and shouldn't do a better job. The point is that the securities industry is pitching a temper tantrum because they are losing revenue. As someone else has pointed out, this is a power grab and the senior citizens "protection" is the excuse for it.
I agree, insurance companies could do a better job of policing it's own.
- 14,808
Not a great analogy. When a clients fund their HSA that doesn't trigger a commissionable event.
Because of that there's no ethics problem. An unethical agent, say, recommending in improper IRA distribution into the account doesn't get a nickel from that rollover.
The issue at heart with annuities is it's the exact opposite. It's an ethical nightmare. What IS the proper amount?
If a client has $600,000 wrapped up in poor performing or risky investments how much of that $600K is proper to move into an annuity? $200K of it? All of it? And what set of criteria would an insurance agent use to come up with such a recommendation?
If the client is a "lay down" and they recommend a $200K annuity then at 5% commish they've earned $10,000. However, if they recommend they move all $600k now it's a $30,000 commish.
Tough ethical situation.
Health insurance agents are not presented with the same ethical dilemma...unless you think I can talk someone into a $1,200 premium to get extra commission. Go try that.
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Yes I know it was the SEC proposing the rule but most of the time FINRA and the SEC work in harmony.
Ah the prospectuses. How many people read all those prospectuses, I mean the entire thing? I can't even count how many I handed out over all those years as a Reg Rep. Can you hold up your hand and make a possible zero. Even the anal accountants didn't read the darn things in their entirety. Ninety nine percent of people want to know the minor particulars of something and don't have the time nor the patience to read small print, attorney-like phrased, prospectuses.
Ah the prospectuses. How many people read all those prospectuses, I mean the entire thing? I can't even count how many I handed out over all those years as a Reg Rep. Can you hold up your hand and make a possible zero. Even the anal accountants didn't read the darn things in their entirety. Ninety nine percent of people want to know the minor particulars of something and don't have the time nor the patience to read small print, attorney-like phrased, prospectuses.
- 14,808
Let me shout this out to the cheap seats:
I agree
I agree
I agree
However, the annuity industry has been negligent for not seeing this coming and getting rid of unethical marketing groups and agents. Do they have the ability? Absolutely.
Is it fair they are being singled out when there's so much muck in the industry? No - it's not fair. However, the annuity carriers should have known that they needed an extra layer of protection when it comes to the senior market.
There's something called "word on the street." The word on the street is you can do near anything and get away with it.
The word on the street could be that if you're caught "screwing" a senior your appointment is terminated immediately and the carrier reports you to the DOI.
Commission is not, nor has it been, the trigger for giving investment or financial advice.
Commission does not produce more of an ethical dilemma. It produces no more of a dilemma that does making your sales numbers at a non-commission job. If you are in sales, in a non-commission job not making your numbers....you are out the door. Either you are an ethical person or you are not an ethical person. Commissions don't make one n unethical person.
Commission does not produce more of an ethical dilemma. It produces no more of a dilemma that does making your sales numbers at a non-commission job. If you are in sales, in a non-commission job not making your numbers....you are out the door. Either you are an ethical person or you are not an ethical person. Commissions don't make one n unethical person.
