We are all on the same team. We are all this together. We all are trying to achieve the same goal, and that goal is to “protect the annuity franchise.” And this annuity franchise involves the overall perception and growth of fixed annuities as transfer of risk solutions that can contractually solve for and guarantee retirement goals. Let’s all be clear on this point.
After my recent article, “The annuity industry needs its own series 7 exam…now,” I was both blasted and applauded by agents across America. I expected that divide, but was surprised to see Kim O’Brien, President & CEO of the National Association of Fixed Annuities (NAFA), post a letter on the NAFA website (www.nafa.com) that disagreed and attacked me (and LifeHealthPro.com) for my article. I encourage you to go to the NAFA site and read the letter in full.
For the record, I’m glad the letter was written, welcome the discussion, and compliment Kim O’Brien’s passion about this subject matter and as an industry leader. FYI Kim we are on the same team! I think that it is important for this education discussion to continue within the annuity industry, so I decided to take a look at some of the specific points of Kim O’Brien’s letter, comment on each, and let the blogging and exchange of ideas begin.
Just so everyone knows, I am an independent agent and I do not have an active securities license. My only agenda is to protect and properly promote the greatest transfer of risk products ever fixed annuities.
Letter: “NAFA, the National Association of Fixed Annuities, has been advocating on behalf of fixed annuities for more than 15 years…”
Comment: I think that I speak for all agents when I say that I appreciate the ongoing efforts and work of NAFA. I was only suggesting that we as an industry need to continually improve, from the agent on up. I’m glad that you stopped the use of “made up” professional designations and hope that you now focus your efforts on inappropriate Internet, radio and TV promotion of annuities, in addition to higher educational standards.
Letter: “Meanwhile, when a sale of a fixed annuity is deemed fraudulent or unsuitable the insurance company returns the annuities full value and often additional interest. This demonstrates that fixed annuities are robustly regulated by the individual state insurance departments and the licensing and continuing education requirements are appropriate and best for consumers.”
Comment: The fact that insurance companies refund the money doesn’t have anything to do with regulation in my opinion. It has to do with the insurance company doing the right thing. Doesn’t the insurance company determine if it was a fraudulent/unsuitable sale, not the state? In addition, I’m not sure most agents agree that some of the current advertising practices are “robustly regulated.” Just take a look at the Internet videos, pop-up ads and display ads (you might even see some “questionable verbiage” with display ads on right hand side of this LHP page.). As for the education requirement being appropriate, I (along with many others) will just have to respectfully disagree. However, many do agree with you that all is well with the current standards in place.
Letter: “Mr. Haithcock’s comments lumping in 151A legislation in the same sentence as ‘annuity product slingers’ as well as his blanket statement about the need for the annuity industry to ‘raise the bar for initial and ongoing licensing requirements’ is self-serving and contradictory to the NAIC’s tracking of complaints and market conduct actions.”
Comment: I knew that even mentioning 151A would knock the scab off a recently healed wound. I’m not sure how calling for more education is “self-serving.” I guess it would be if I owned an agent education company, but I don’t. I am a typical independent agent. I just believe we should hold ourselves to a higher standard when it comes to beginning and ongoing education of our annuity industry’s sales force.
Letter: “NAFA members believe that there is no place for abusive sales practices in our industry, and much effort has been made both on a regulatory front and within the industry voluntarily to prevent such practices and punish their purveyors.”
Comment: Glad to hear that, and I know you are committed to the very tough job of cleaning up abusive sales practices. I think I speak for the majority of agents to encourage you to focus on what’s happening on the Internet as your next regulatory focus. Most agents that contacted me after the last article either have someone in their local market that is “crossing the line” with how they are selling annuities, or they see the ongoing inappropriate annuity promotions that are happening on the Internet. It’s frustrating for agents to combat these types of sales practices on a daily basis.
Letter: “Unfortunately, Mr. Haithcock’s blog made it appear as though all independent professionals who sell fixed annuities are unethical.”
Comment: This certainly was not my intention, and apologize if it read that way. The majority of agents are definitely trying to do the right thing for the customer. Like any industry, there are a few bad apples that hurt everyone.
Letter: “There is clear-cut certainty that the fixed annuities offered in the marketplace today are insurance products and not securities.”
Comment: I never argued this issue at all. I agree that FIAs are not securities. My “rooting” for 151A was based on the raising of the educational bar only. You, and others, missed the point. All I am suggesting is to improve our education standards as an industry. More education is never a bad thing. I was using the Series 7 as an example of possibly having our own type of rigorous exam for fixed annuities.
Letter: “By stating that the industry, ‘….needs its own Series 7 exam…now,’ flies in the face of millions upon millions of dollars Americans have lost to Series 7 licensees.”
Comment: I see no need in taking a shot at our securities brethren, or saying that they are in essence, worse than we are. No one is perfect. No industry is perfect. And of course, more education doesn’t mean someone will be more ethical. That’s just common sense. I never implied that the annuity or securities industry was better than the other. Like any industry, both annuities and securities need ongoing improvement. We, the financial services industry, owe that dedication and diligence to the consumer.
Letter: “We find it quite odd and questionable that LifeHealthPro published what was essentially an incendiary blog without substance and its sole purpose appears to be self-promotion.”
Comment: It’s called free speech, and the editor or LifeHealthPro addressed this unfounded accusation very well in the comments section of my previous article. The “without substance” and “self-promotion” comments I think are reactionary accusations due to me bringing up this sensitive subject matter. If getting unprofessionally blasted, physically threatened, and called names by hundreds of agents is self-promotion, then I’m guilty.
Letter: “In doing so, the publication has insulted an entire industry of independent producers who work diligently with their respective clients to develop secure retirement alternatives and plans. That alone is cause for great concern.”
Comment: I don’t think so, considering that more than half of the agents that contacted me and posted comments agreed with my premise. I think LifeHealthPro is doing their job to encourage the discussion of ideas.
Letter: “Hopefully, upon further reflection, the Editors will reconsider material of this nature before publishing.”
Comment: This one is a little scary. We, as a vibrant and growing annuity industry, should never call for the “editing” of ideas. I think anyone outside of the industry would compliment all of us for having this ongoing intellectual discussion.
I look forward to the discussion and the insightful comments from the LifeHealthPro readers. However, this time, let’s keep the comments professional and on point. If you hate me or violently disagree with me, that’s fine. It’s a free country. I welcome direct phone calls (904-614-2001) or emails (firstname.lastname@example.org) if you want to yell/discuss things one on one. I’m not perfect, don’t think I’m better than anyone else, and would love to hear your opinions.
Remember, we are all on the same team trying to protect and grow the annuity industry and these great transfer of risk strategies that we all know can help most Americans. It’s OK to fight and argue along the way as we accomplish this goal together.
For more from Stan Haithcock, see: