Who's who in annuities: The power list

“I involve my family in the business and bring my children to client events and even the workshops,” says Smith. “It’s a win-win as the clients love to see the family and I get to spend time with them. You’ve really got to love what you do to be content with the hard work and dedication that goes into being a top advisor, and the end results make it all worth it.”

Smith says that being able to witness “the impact your services have for clients” has been among the great rewards of his 13 years of working in this industry. “I remember specifically a client couple that started with me in 1995. They were in their mid-70s and I helped them with estate planning and getting their house in order.” By 2001, the husband required nursing home care, and later the couple both passed away. A portion of the couple’s estate was in annuities, and Smith was able to pass that onto their children within 30 days of their death and without probate.

In fact, none of their estate went through probate. Their children were very happy with my services and witnessing the end result and the fruition of my advising was really an eye-opener for me.”

Smith understands the trust that is placed in advisors’ hands and, as a result, the scrutiny the industry is currently under. In regards to the SEC proposal, he says, “it has brought the need for more training and industry education to the forefront, not only on FIA products and suitability, but also with all comparable products within the financial realm, and on both side. However, I do not think that FIAs should be regulated; you cannot lose money in our products — end of story.”

Sean Dilweg
Sean Dilweg, Commissioner of Insurance for the State of Wisconsin, stepped into office January 1, 2007, where he oversees a staff of 135. While thoughts for many turn to Brett Favre or cheese when Wisconsin is mentioned, the state has been “very active ensuring that suitable annuity sales are made to consumers,” says Dilweg.

“Wisconsin enacted both the original NAIC Suitability in Annuity Transactions Model and the Model as modified to apply to sales of annuities to all consumers, not only seniors,” he adds “We also issued a record forfeiture against an insurer with an order to suspend sales of annuity products through 2012.”

Dilweg has long had a hand in the industry. Prior to becoming Commissioner, he led a number of business initiatives for the state. “I understood why annuities are an important product in financial plans to provide a continued stream of income. This is especially true given the expected numbers of baby boomers looking at retirement. When I became Commissioner, one of my first duties was to preside over administrative hearings involving annuity sales. I realized more needed to be done on the issue of annuity suitability.”

To counteract that, Dilweg created the Annuity Sales Supervision Advisory Committee to advise on the development of standards for supervision of annuity sales, an element that is missing in the NAIC Model. “In 2008, I was named vice-chair of the NAIC A Committee on Life Insurance and Annuities. Following the work of my Wisconsin annuity suitability committee, I initiated the creation of the Suitability of Annuities Sales Working Group.”

Dilweg chairs that working group and says, “we anticipate that by year-end, there will be some amendments recommended to modify the NAIC Model Act, focusing on supervisory standards and training in the sale of annuity products.”

Making sure annuities benefit consumers is a key to Dilweg’s mission and he realizes that the product will only continue to grow. “We are witnessing the largest transference of wealth that this nation has seen as baby boomers retire. Annuities are a valuable tool in building a retirement plan. I expect that annuity products continue to develop and change to meet consumer needs.”

Joe Borg
Commissioner Joseph P. Borg, Director of the Alabama Securities Commission, slips in the occasional “y’all” in conversation and it sounds … strange, spoken in his New York accent. Although he’s lived in Alabama for decades, he’s still a New Yorker at his core, and it’s that Big City drive that has earned him fans and foes among the annuities crowd.

While his position on securitizing annuities is debatable, his inclusion on this Power List is not; Borg’s stance on the issue carries much weight and he is wielding it. He’s best known in annuity circles for being a champion of SEC 151A. In his words, “it’s the only proposal with sufficient ‘clout’ and a proven system of licensing, registration, and consumer protections to alleviate the problem (of complaints and lawsuits). The industry has ignored the issues and now, when national intervention is imminent, there is a ‘concern’ to fix the problems.

“For years, and as long as the industry and agents were making huge commissions, there was little being done to address the issue. At present, unless a significant, workable, enforcement-capable alternative is proposed that insures that agents selling are knowledgeable, licensed — trackable with histories equivalent to CRD — and liable for their actions with sanctions, then the only option currently on the table is 151A. That being said, there is always room for dialogue and discussion, but delays only serve to exacerbate the problem.”

Although Borg is known for his tough stance on annuities, he sees a silver lining, moving forward. “I believe that over the next several years we will see more consumer- and investor-friendly products — more clear disclosure, transparency in the transactions, higher standards set for the companies and agents who sell. It is unfortunate that it takes legislation, litigation, expos?s, and congressional hearings to push the industry in the right direction.”

He also sees a higher scrutinization of new products than in the past. “There will come a point that the ‘theory’ that these type of products are strictly insurance will fall to the realization that these are in fact hybrid products. I expect there will be increased cooperative review and enforcement by a collaboration of insurance and securities regulators (on both state and federal levels), each recognizing and utilizing their respective strengths.”