Variable annuities are excellent products, but they can be extremely complex and must be carefully reviewed by potential purchasers. Advisor One’s Melanie Waddell says that “FINRA and SEC Warn About Annuity Risks” in this new article. The two organizations are concerned with variable annuity disclosures, suitability for consumers, and the practice of chasing high yields. At the IRI’s regulatory conference, FINRA’s VP of member regulation programs said that the organization looks at variable annuities as extremely complex because of their many riders and other features. They want to protect consumers and make sure that a review of variable annuity services shows companies are working ethically to inform the public.
Sales of variable annuities went up 12% between 2010 and 2011, but the SEC’s associate director of the Division of Investment Management says it is worth noting that many players have left the game. Some of the largest variable annuity sellers are either no longer selling the products or have drastically changed up what they offer. She stresses that it is more important than ever to be careful what variable annuities are offered and ensure that investors are protected. Investment materials need to be clear about the costs and the limitations associated with living benefit riders. As investors have fewer investment choices within their variable annuities, they need to be informed about their new potential, or lack there-of, for gains. FINRA and the SEC are simply reminding insurance companies to treat consumers well and reminding consumers to do their variable annuity reviewing.
Written by Rachel Summit
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