Top Regulatory Official Voices Concerns About Variable Annuity Sales
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 resemble "complex structured products" in the way they limit returns during market rallies and losses during market slumps.
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 customer complaints.
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 this blog 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 alternatives.
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