“Annuity customers want a fair shake, not a shakedown,” said Michael J. Cajthaml, a general practitioner and president of McHenry County Investment Services, McHenry, Ill., during a panel discussion here on fixed annuities.
He was addressing how the industry should position its products in the marketplace.
The panel was part of the annual Producers’ Forum & Expo sponsored by National Association for Fixed Annuities, Milwaukee, Wis.
Fixed annuities, and especially equity indexed annuities, have an “unbelievable” future, noted another panelist, Danny Duffy, an investment representative with the Nevada Federal Credit Union, Las Vegas.
That’s because most people today are more concerned with not losing money than with making money on their deposits, he said. They see annuities as good ways to preserve capital.
But to achieve its potential, Cajthaml insisted the industry needs to do a better job of keeping its practices beyond reproach. For instance, “why should there be 15 years of surrender penalties?” he asked. “Why should penalties be as high at 20%? And why do beneficiaries have to take the proceeds over 5 years?”
He also questioned why some sales representatives never fully explain the penalty provisions or the death benefits as well as other matters, and he pointed to questions about suitability and disclosure practices.
“We need to clean our own houses,” said Cajthaml. “If we don’t, someone else will.”