A top official at the National Association of Securities Dealers says too many equity-indexed annuity sellers are portraying them as no-risk products.
Robert Glauber, chairman of the NASD, Washington, complained about the EIA sales process recently in Boca Raton, Fla., at a conference organized by the Securities Industry Association, New York.
“There are variable annuities, which are subject to NASD regulation; fixed annuities, which are subject to state insurance commissioners’ regulation; and equity-indexed annuities, which are subject to utterly ambiguous regulation because it isn’t entirely clear to anyone whether they’re insurance products or securities,” Glauber said.
“Yet all these products look pretty much the same to investors,” he continued. “EIAs are particularly complex. They are often marketed as risk-free, which they most certainly are not. And they are marketed disproportionately to elderly people, often without suitability analyses having been made. And sales commissions are as high as 10%.”
The NASD has proposed a set of rules to stop “this sort of irresponsible behavior in sales of variable annuities,” Glauber said.