Two concepts are in play today that almost seem incompatible.
One is the growing trend to impose heightened “suitability” requirements before deferred annuities can be sold to senior citizens–to protect the seniors.
The other is the change in paradigm that has taken place among senior citizens, with seniors enjoying more active lifestyles than was ever the case with their parents and grandparents.
But if seniors are more active, more aware, and more in control of their own destinies, why do they need greater protection from themselves?
We conclude that there is merit in the old adage, “If it ain’t broke, don’t fix it!”
Legislators, regulators and self-appointed consumer advocates seem determined to protect seniors from themselves when it comes to financial planning. There seems to be some idea that when people reach a certain age (there is always controversy over the exact definition of a “senior citizen”), they become suddenly incompetent to handle their affairs and need to be protected from themselves.
Almost every day, there is a news article detailing how some regulator or other pundit hopes to protect seniors from their own folly by placing additional burdens both on their ability to make decisions and on those people attempting to provide them financial advice and financial products.
Presently, there almost seems to be a trend among certain regulators (and not a few state attorneys general) to hold that no sale of an annuity to a senior (however that term is defined) is “suitable.”
This attitude is condescending and insulting to the people who have provided the economic knowledge and capability to power this nation to the economic powerhouse it has become.
To take the position that at some arbitrary age, these people somehow become incapable of managing their own affairs and need the government to determine what is in their best interests demeans these important members of society.
That said, we have no problem with suitability standards for everyone.
The Securities and Exchange Commission and the National Association of Securities Dealers have been wrestling with new suitability standards for deferred variable annuities for over 3 years. It is likely that new standards will be in place in the immediate future, perhaps before this article is printed.
State insurance regulators are likewise in the process of imposing suitability standards on non-variable annuities. (There seems to be a jurisdictional battle going on between federal and state regulators over who should determine standards for indexed annuities.)