By Chad M. Kohler, Esq.
Recently, while speaking at an industry conference in Washington, D.C.,
a top regulatory official spoke publicly about his growing concerns over
the sale of variable annuities in today's marketplace.
The remarks came from Carlo di Florio, chief risk officer and head of strategy
at the Financial Industry Regulatory Authority (FINRA), who was speaking
at the Insured Retirement Institute Government, Legal and Regulatory Conference.
As part of his comments, di Florio warned that variable annuities increasingly
structured products" in the way they limit returns during market rallies and losses during
As variable annuities become more complex, more and more investors are
having frustrations about disclosures, sales practices, and surrender
rules, which often are not adequately disclosed by the brokers selling
the products, according to di Florio.
For these reasons, di Florio said FINRA is "very focused" on
variable annuities, which remain one of the "top" products for
Di Florio also indicated that FINRA is monitoring complex products and
interest-rate-sensitive products, which suggests perhaps that some action
by regulators may be afoot.
Any such action would be a step in the right direction for investors. As
noted just a few weeks ago, variable annuities are incredibly complex products
and inappropriate for many investors. Investors often find out too late
that that they would have been much better served if their financial advisor
had steered them toward other, more transparent, lower-cost investment
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