Are Equity Indexed Annuities Regulated By FINRA?

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Hi there, Stan the Annuity Man,

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America's annuity agent, licensed in all

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50 states in Puerto Rico. Today's

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question is, are equity index annuities,

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now called fixed index annuities,

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regulated by FINRA

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uh and the SEC? Short answer is no, but

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I'm going to explain why after this.

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[music]

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Okay. In 1995, equity indexed annuities

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were put on the planet as a a strategy

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to compete with CD returns. They were

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never put on the planet to be a market

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product, and they have never performed

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like that and never will. And they're

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not designed to. It's amazing to me that

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the sales pitches that I hear coming

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back from my clients is, "This guy told

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me we're going to get market returns

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consistently," which is just it's just

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ridiculous,

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you know? It's like it's like it's like

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someone who's extremely overweight

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saying you're gonna win the 110 meter

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hurdles, high hurdles. You're going to

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win it. No, you're not. So the question,

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you know, so then what happened, long

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story short, equity index annuities name

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was changed to fixed index annuity

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because

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the sales pitch was leaning way more

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toward it being a market product.

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And what FINRA said, and and by the way,

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equity index annuities, fixed index

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annuities, whatever you want to call

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them, are not regulated by overseen by

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FINRA or the SEC because they are not

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securities.

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They're life insurance products. Okay?

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But the fact that the line was being

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blurred a lot by the sales pitches,

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um there was a time that the SEC goes,

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well, if you're going to pitch it as a

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market product, then we're going to

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regulate it as a market product. And

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then that's when it the kind of the

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change long story that the change went

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from equity index annuity to fixed index

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annuity. But it's it's a life insurance

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product. To sell the product, you have

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to pass a life insurance exam at the

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state level and make a 70.

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Literally, you could just come off the

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street, pass the test, and sell index

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annuities. The bar is very, very low.

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You know, I come from the securities

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world. come from, you know, Morgan

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Stanley, Dean Wood, Payne Weber, UBS

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where you had to pass real tests. You I

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mean, there's real CE work. I mean, you

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have to understand everything to be able

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to talk that side. But FINRA and the SEC

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at this point do not regulate and

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oversee equity index annuities. They're

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overseen at the state level by the

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insurance commissioner at the state

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level and the NIC, the National

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Association of Insurance Commissioners,

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which is all of them. And that's the

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overseeing body of them. Now, just

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recently in the past couple years, there

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have been what's called buffer annuity,

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shield annuities, now Rialas, registered

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index linked annuities. That's the

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brokerage and banks version of of index

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annuities.

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My theory, can't prove it. No one's

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going to tell me I'm wrong, but no one's

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no or right or wrong. No one's really

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said, "Hey, Stan, that's wrong."

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But my instinct is there was so much

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money coming out of the brokerage firms

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and the banks with bad sales pitches on

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equity index annuities and people buying

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the bad sales pitches and falling for it

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and then moving their money that the

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brokerage firms go, "You know what?

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Let's create our own." And that's called

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a registered index linked annuity.

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It's just a fancy version of a index

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annuity with some a little bit few a few

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more moving parts as they say and and

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Rialas are overseen by SEC Fenra etc.

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Regardless

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my opinion and I'm right annuities

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should never be purchased for market

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growth under any circumstance period.

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There was a time way back in the day

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that there was a couple of no load, no

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fee variable annuities, but they've

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gone. They're gone. And variable

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annuities were put on the planet in 1954

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by TIAA to back then it was TIA CF to um

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offer mutual funds that could grow tax

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deferred.

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Concept was right, got bastardized. Now

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the average annual fee for a variable

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annuity is 3%. annual for the life of

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the policy.

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The fees on Rialas can stack up as well.

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But I do think if if the sales pitch of

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index annuities continue to be

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referring to the markets, talking about

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the markets, talking about market

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returns, I think FINRA and the SEC have

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a right to go back in and regulate it.

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See, in order to talk about markets,

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stock market, mutual funds, global

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markets, currencies, things like that,

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you have to have a specific license to

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do that. You have to have what's called

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a series 7 back in the day. I'm dating

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myself is what that was called. Now, you

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can be a registered investment advisor

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and do that with specific licensing,

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certified financial planner. There's all

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kinds of things that you have to pass

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test and you have to be very astute at a

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lot of things to be able to talk about

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it. You can't what FINRA's argument was

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back in the day and they might bring it

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back up is wait a minute Johnny Apple

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Seed agent is sitting over here talking

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about markets and he's got a life

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insurance license and he's selling an

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index annuity. Something's wrong. You're

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darn right something's wrong. Index

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annuities for us, we only use them as a

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delivery system for the income writer

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when you need income starting in the

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future. And we quote all income writers

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like a commodity product looking for the

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highest guarantee A+ or better rated. We

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don't we don't spend a second on the cap

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spreads, participation rates, and all

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the moving parts. It's that's a colossal

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joke at this point of the product's

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life. Maybe that'll change in the

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future, but right now you'd be better

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off buying a MA and just getting a

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guaranteed interest rate. That's the

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annuity industry version of a CD. But

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the reason I think this question's asked

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is if you go to a, you know, expensive

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state dinner seminar and they're talking

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about index annuity, you'd swear they're

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talking about a market product. It's not

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a market product. It's a CD product.

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There are index options that that

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include no dividends. Why is that

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important, Stan? Because S&P 500, which

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is a commonly used index for index

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annuities,

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54% of the historical returns are

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dividend based. No dividends in index

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annuities. I'm not even sure the people

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selling them know that stat

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or care. Are fixed index annuities used

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to be called equity index annuities

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overseen by FNRA? Not no, but maybe in

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the future if the sales pitches continue

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the way they're going.

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They're not growth products. are CD

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products and that's okay if you know

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that, right? Hey, do me a favor. Go to

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my site theanuityman.com and run quotes,

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download my books, you know, schedule a

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call if you want to. And above my head's

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a spinning clock. I did a video on how

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annuities

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can protect the family, help the family.

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Um, and I give some specific information

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on how I use them for my family, but

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might be food for thought for all of you

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a personalities out there that want to

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kind of control it from the grave. You

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can do that with annuities in a

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contractual format. Hey, my name is Stan

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the Annuity Man.