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Regulation and Compliance > State Regulation

A question of control

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When the discussion turned to who should have oversight of insurance products, no one wanted to see regulation of annuities turned over to FINRA and Mary Schapiro, who admitted to NAFA’s Kim O’Brien that she wanted more oversight authority: “[She] said to me – very wonderful woman, by the way, as much as I disagree with her – she said to me it’s her personal career goal to have regulatory authority over every product sold in the marketplace.”

Opinions differed as to the validity of having a national body, one organization that could license advisors and regulate products. Doing so may help with suitability and with avoiding consumer confusion, but that is a lot of power to hand to one group. John Kailunas II said it also raises concern over checks and balances. Many advisors who work in several states, like Ryan Poterack and Kailunas, would like to see the states work more closely to develop more consistent standards.

The group generally agreed licensing might be a function that could be handled by an umbrella organization, but O’Brien pointed out that the products themselves should stay under the purview of the states because of the widely varying insurance needs across state lines.

“The reason why insurance was assigned to the states, it goes back to the Federalist Papers, is that states know best,” O’Brien says. “States are different. The insurance needs of their population are different.”

About the only issue that found consensus was keeping FINRA regulating securities and keeping the states – in concert or individually – managing the insurance side of the ledger.


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