The Financial Industry Regulatory Authority is watching carefully to see how marketers go about selling variable annuities.
Susan Merrill, chief of enforcement at FINRA, Washington, delivered that message here recently at a conference organized by NAVA, Reston, Va.
Merrill said she disagrees with critics who suggest that variable annuities ought to be eliminated.
“I believe there is a place in the market for these products, to help address the longevity risk that new retirees will increasingly face,” Merrill said, according to a written version of her speech distributed by FINRA. “But I am here to send a very clear message: FINRA is watching very closely how variable annuities are being sold to the public–and for good reasons.”
Sales representatives need to make sure that each annuity that a customer buys is suitable for the customer, Merrill said.
Reps “also need to work closely with the customer to determine how important it may be to keep their investment liquid,” Merrill said.
Merrill described one large Chicago bank that was fined $225,000 by FINRA for making unsuitable sales of deferred variable annuities to 23 customers.