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July 31, 2011 at 08:00 PM
My annual study on index annuity complaints shows on a sales volume adjusted-basis, annuity complaints have fallen 75 percent since 2007. It seems the annuity industry is doing a much better job of properly selling their products. Which brought a question to mind: How many investors complain about their stockbroker or advisor?
The annuity complaint data is easily available at the National Association of Insurance Commissioners (NAIC) website, but it can be difficult to find securities complaint data. Although FINRA reports there were 3,208 customer complaints in 2010, the SEC only lists data on the top 10 categories (even so they accounted for 5,919 complaints last year). The North American Securities
Administration Association (NASAA) makes a lot of noise about enforcement, but doesn’t seem to be current on complaints; their latest report covers the period from 2008-09, when they report 2,294 Enforcement Actions Initiated by securities departments in 42 states.
I could, of course, go through and tally up the individual states, but there’s a problem with that. State securities departments tend not to report complaints, but only actions, which aren’t the same thing. Indeed, when I was researching regulatory actions I was assured by two securities commissioners that they had received “hundreds of complaints” against index annuity producers.
When I mentioned to each that I had uncovered less than a handful of regulatory actions against annuity agents in their state and would like to come to their offices and review these “hundreds of complaints” I was told that they didn’t keep records of those files.
