Annuity FYI Blog

A strong debate over who should oversee equity indexed annuity products has been going on since the SEC introduced Rule 151A in 2008.  According to Investment News’ “Indexed-annuities amendment: Insurers yea, advisers nay” by Mark Schoeff Jr. and Darla Mercado, the debate between sides will remain even if this amendment makes a final decision.  Regulation of equity indexed annuities will remain in the control of individual states if the bill passes, instead of transferring to the SEC as they had hoped.  The products will be classified as insurance products rather than securities.

Insurers are happy that the annuities will remain out of the hands of the SEC, while advisers would have preferred the latter.  Allianz Life, the National Association of Fixed Annuities, and the National Association of Insurance Commissioners support the bill keeping the regulation of equity indexed annuity products at the level of the state insurance commissioners.  While Democratic leaders hoped that the products would be regulated by the SEC, most rank and file Democrats voted with Republicans that the control should remain with state insurance commissioners.

The advisers who don’t agree with this bill believe that consumer protection against abusive sales representatives targeting vulnerable people will be compromised.  They believe that FINRA and members of the broker-dealer world have more knowledge to regulate a product tied to securities.  Because of past problems with equity indexed annuities, the National Association of Insurance Commissioners has put new suitability standards on the products believing that will help get rid of shady sellers.  There is also a concern in the government that taking away the state regulation of these products will force smaller insurance companies and individual agents out of business, leading to increased unemployment.  The debate rages on until the final bill is signed by the President.

In “Applications Now Available for Military Spouses to Become Accredited Financial Counselors,” a FINRA news release, a program highlighting the FINRA Investor Education Foundation Military Spouse Fellowship Program is explained.  The FINRA Foundation’s goal is two-fold.  They aim to give military spouses highly marketable job skills to help earn money for their family along with helping educate the military community as a whole.  A lot of the military families out there struggle with high debt and a lack of retirement planning, so the hope is that this free training and certification process works to change that.

Since the program started five years ago, 188 people have graduated as Accredited Financial Counselors.  Military spouses help in volunteer and paid positions with everything from finding the best fixed annuity rates to developing plans for retirement.  Participants are required to finish the course and work for at least two years in the financial counseling field.  This Spouse Fellowship Program is available for current and surviving spouses of both active duty and retired service members.  They can be Army, Navy, Marine Corps, Air Force, Coast Guard, National Guard, and even spouses of U.S. Public Health Service Commissioned Corps or National Oceanic and Atmospheric Administration officials.

FINRA has partnered with the United Way to spread financial education, according to FINRA’s news release “FINRA Investor Education Foundation and United Way Worldwide Announce Nearly $1.5 Million in Grants to Support Grassroots Financial Education Projects.”  Twelve United Way branches and community groups received the grants to help promote the FINRA Foundation and United Way’s new program, Financial Education in Your Community.  FINRA is working hard to help lower-income families become financially stable.  Through these education programs, someone who doesn’t even know what an annuity is may realize that the product is best for protecting their financial future.

Community groups have the ability to reach large numbers of people and relay information that can help them without bias.  During this tough economic time, these grants were given in areas hardest hit financially to help people become stable and look forward to their future.  Free educational programs will help working families and individuals on the road to financial stability.  They may learn about the best annuity rates to protect their retirement or simply how to balance their checkbook.  Community needs are across the financial spectrum.  These twelve grants were given to seven United Way branches located in Texas, Nebraska, Wisconsin, Pennsylvania, Connecticut, and New York.  The community groups receiving the other five grants are in Georgia, Arizona, South Dakota, and Tennessee.  FINRA believes that their help in financially educating the communities will make Americans self-sufficient and in charge of their futures.

The Financial Industry Regulatory Authority (FINRA) will ask the SEC for permission to expand their BrokerCheck system, according to FINRA’s news release “FINRA Proposes Further Expansion of Broker Information Publicly Available Through BrokerCheck.”  The BrokerCheck system allows the public to view records of securities brokers both current and former for free.  The proposed changes would increase the amount of complaints that are publicly available.  It would also make the records of brokers that left the industry available for ten years, up from the two years currently available.  Information regarding any criminal convictions and certain lawsuits would actually be permanently available.

Wise consumers compare annuities before making their investments.  Now it can be easier to compare the brokers who sell annuities to consumers.  Unfortunately, shady brokers who have been forced to leave the industry have shown up in other facets of finance looking to do harm.  They have been involved in fraud and other forms of misconduct related to finance.  FINRA wants to get rid of these former brokers for good, but as wise consumers we need to use FINRA’s free online BrokerCheck service for it to be effective.  Before you purchase annuities or make other financial investments, check your broker out online and make sure that they have a moral financial record.

“FINRA Issues Guidance to Firms, Brokers on Communications with Public Through Social Networking Web Sites” is the latest news release from the Financial Industry Regulatory Authority (FINRA).  FINRA’s Regulatory Notice 10-06 is a question and answer document meant to provide recommendations to securities firms and brokers regarding social networking sites.  Facebook, LinkedIn, Twitter, blogs and other social networking sites are one of the most popular ways for companies to communicate with the public.  With their soaring popularity, issues arise regarding the credibility of the information being posted.  FINRA’s document stresses how important it is for companies not to mislead clients and to keep good records of their social networking postings.

Whether in the business of annuities, stocks, or another financial product, FINRA wants to ensure that firms and brokers have developed new procedures to handle social networking.  All regulations relating to the industry still need to be followed when using social networking for marketing and other communications.  There are actually technology systems being developed to help companies keep records and maintain accountability with social networking.  FINRA developed this document through their own research and experience along with a Social Networking Task Force representing 14 different firms.