NU Online News Service, April 27, 2004,12:00 p.m ? The National Association of Securities Dealers has proposed a new rule that would impose stricter requirements on financial advisors selling deferred variable annuities.[@@]

NASD’s board of governors in Washington has proposed new sales practice standards and supervisory requirements, tighter rules requiring disclosure to clients and more training for financial advisors selling VAs.

NASD says the proposed rule would address concerns that some advisors have been making unsuitable recommendations to certain clients about deferred VAs.

VA sales “have been the focus of increased, NASD-wide attention for the last two years and the subject of more than 80 disciplinary actions during that time,” says Robert Glauber, NASD chairman and chief executive officer. “We believe this rule proposal represents an appropriate approach to ensuring adequate protection for investors considering or purchasing deferred variable annuities.”

The new rule would make mandatory guidelines that NASD had previously issued on a voluntary basis. Among other things, it would require registered representatives to be sure each client is informed about the unique features of a VA, that the client has a long-term investment objective and that the VA and its subaccounts fit the client’s needs in terms of risk and liquidity.