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August 24, 2005 at 08:00 PM
To The Editor: (Re: “Reaction Fires Up To NASD Notice on EIAs,” Aug. 15.) Once again the National Association of Securities Dealers is overstepping its authority!
The referenced article states clearly that the SEC did not determine that Equity Index Annuities are securities, even though the NASD wrote to the SEC in 1997 requesting such a declaration.
Herb Perone, an NASD spokesman, according to the article, is quoted as saying, “We don’t have the authority to declare that.” Yet, Mr. Perone said the NASD issued the Notice to ensure that registered firms are supervising the sale of the product in an appropriate way.
Outrageous! Unless the SEC declares EIAs are securities, the NASD has no authority to tell the broker-dealers to supervise the sale of EIAs, let alone how to supervise such sales. As a matter of fact, Mary L. Schapiro, vice chairman of the NASD, during a speech at the NASD Spring Securities Conference in Chicago on May 25, 2005, cautioned broker-dealer firms against erroneously treating EIAs as securities.
EIAs (properly named “Fixed Interest Annuities”) are not securities. There is no risk of investment loss. The only way a client could lose money in a fixed interest annuity is a complete surrender of the contract in less than 4 years (worst case scenario). It seems to me that all securities pose the risk of investment loss. Therefore, EIAs (properly named “Fixed Index Annuities”) are not securities.
Last point. Just because some products have “moving parts” should not open the door for the NASD to claim jurisdiction. A bad precedent. The SEC should step up to the plate and state once and for all–EIAs (properly named “Fixed Index Annuities”) are not securities.
Do you think I’ve made it clear enough?
Peter D. Fischel, CLU
Fremont, Calif.
On Doing What’s Right
For The Client
To The Editor:
Doing what’s best for the client.
We read and hear so much stuff from so-called planners that complain about so many features in long term care insurance. Most recent is the cost of plans, how to cut the costs, cheap plans, are they better?
Here is what needs to be encouraged. Put yourself in the client’s shoes and ask yourself what kind of plan would I be happy to have bought, if I need care tomorrow. If the plan is substandard or inadequate, you will not be able to come back to the children and say, “But mom and dad didn’t want to spend that much on their insurance!”
