Request for input on Rule 151A
I have been asked to present a session on Rule 151A topics - the litigation and other issues related to the Rule - at the October AICP national conference in Phoenix . I would be very interested in hearing from any readers who may have information that you think I may not have seen or an experience you think I should know about. I have no doubt that this discussion can easily fill the 1 hour and 15 minutes allocated to it, but I would love to hear from you and gather as many perspectives and as much information as I can in preparation. Thanks - I hope to see you in Phoenix!
Cailie, I have been covering the 151A/05-50 issue for a while. See my archived article "Mr. Indexed Annuity Goes to Washington" at my website, retirementincomejournal.com, and the EIA chapter in my book, Annuities for Dummies.
There are two salient points in the debate. First, it's widely agreed that the argument that variability of the upside of an EIA makes it a risky asset and not an insurance product is weak. But so is the opposite argument; it's like debating whether soap is water-soluble or fat-soluble. Second, insurance wholesalers say 151A is nothing but an effort by the broker dealers to protect their turf and their pocketbooks. In the mid-2000s, registered reps were selling EIAs "away from" their broker-dealers, and the distributor cut went to the insurance marketing organizations (IMOs) instead of to the broker-dealers. It would be disingenous to discuss this issue without reference to the turf war.
As for the mis-selling of EIAs, there was abuse; you can't waive a 12% commission in front of an insurance agent and not tempt abuse. But securities brokers aren't angels either. It's too bad that the EIA concept has been turned into a circus in the US; Europeans buy similar albeit simpler structured products at the post office and don't think twice. Kerry
BTW, I love your blog.