It is more than perplexing that regulators are spending an inordinate amount of time trying to find fault with fixed indexed annuities.

Due to the downside guarantees, these products have saved clients from suffering billions of dollars in market losses. Yet when advisors write fixed indexed annuities in the current regulatory environment, the implicit message is they should somehow feel guilty for doing so–even though the product offers a principal guarantee, a minimum interest rate guarantee and an income the client cannot outlive.

For the right client, the fixed indexed annuity has been, and still is, an outstanding product. It provides downside protection and upside potential.

Even so, if securities licensed reps want to reposition clients who have been exposed to mutual fund losses by putting them into a fixed index annuity, they’ll need a lot of luck. That’s because any attempt to reposition those assets could be interpreted by regulators as “churning.”

What to do? At the very least, advisors should have such clients sign disclosure forms of the advisor’s own, not just disclosure forms from the financial providers. This includes having them sign a “hold harmless agreement” (see below).

I offer this suggestion as an agent who is doing exactly that. I am not an attorney, but I hired an attorney to draft such a form for the benefit of my business.

The hold harmless approach addresses the exposure the advisor faces due to over-regulation and the resulting compliance requirements. Generally, the problem that gives rise to so much regulation is what the regulators believe to be “agent misrepresentation.” The regulators seem to perceive that the vast majority of injured consumers are alleging agent or broker misrepresentation. Hence, they have spurted out many rules and regulations to correct the perceived problem, and a myriad of compliance requirements have followed.

Complaining about this does no good. The regulations and requirements are already here. But agents and brokers should develop their own response to this complicated situation. That is, they should consider using their own hold harmless agreement with clients.

Such an agreement would help protect the advisor against civil litigation, and it would certainly help clear up any potential misunderstandings between agent and client. This should help reduce exposure to errors and omissions claims.

The rationale: It is not enough evidence in today’s litigious environment just to have company/product disclosure information and forms. Maybe the company is protected by such information and forms, but the materials don’t protect the broker or agent from civil litigation.

Having one’s own hold harmless agreement recognizes two trends: 1) we are living in an overly regulated environment; and 2) it is more difficult now than ever before to do substantial amounts of business without client complaints.

As financial professionals, advisors can do something about this to protect their businesses. Have a legal professional draft a hold harmless agreement suitable to the practice. This agreement should be replete with specific details as to why the client is doing business with you.

My own hold harmless agreement has a complete section on replacement. This recognizes that the client has been given an opportunity to review the replaced business and that the advisor has advised the client of new surrender charges/vesting schedules.

Having a section dedicated to clients that are over 75-years-old helps, too. Such a section could say something like, “At XYZ Company, we recommend that the client consult with an independent third party (such as an adult child) prior to signing any contract for financial services or products.” This benefits the client, by ensuring he or she has been encouraged to obtain third-party consult. It also protects the advisor, by minimizing and reducing fraudulent liability claims that may be brought by surviving adult children who are unhappy with the advisor’s actions during the parent’s lifetime.

If the advisor has a signed hold harmless agreement from the client, this would go a long way towards clearing up any misunderstandings if a claim goes to arbitration or even to court.

For nearly 13 years, I served as an officer in the U.S. Marine Corps, where I learned the importance of anticipating arising issues and making contingency plans. Understanding the terrain and successfully navigating helps all of us get to where we want to go with the least amount of headaches.