Who Regulates Variable Annuities At The Federal Level?

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Hi there, Stan The Annuity Man, America's annuity agent,

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licensed in all 50 states and Puerto Rico, founder of Contractual Guarantees

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Only (CGO). We only look at what an annuity will do, not what it might do.

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Today's topic is who regulates variable annuities at the federal

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level. I'm going to go through who regulates annuities at every level,

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just because there's more than just variable annuities, but I'll do that after this.

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So, variable annuities were put on the planet, I think, in 1954 by TIAA. Back then,

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they were called TIAA-CREF. It was a very unique product that you could put mutual funds, they call

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them separate accounts, but mutual funds, inside of a life insurance policy. And in a Non-IRA account,

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that potential hypothetical growth could grow tax-deferred. So, it's been around a good bit.

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But it's interesting. Right now, it's kind of a dinosaur. You don't see a lot of that anymore.

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A lot of people don't. I don't think agency advisors even show that because the average annual fee is

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between 2.5% to 3% every year for the life of the policy in most cases, which is a lot. I mean,

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there are some no-load variable annuities, but they're few and far between, to say the least.

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Variable annuities, and the question is who regulates them? That's a security, okay?

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Stocks, bonds, mutual funds, variable annuities, you know, that's the SEC,

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that's the NASD, that's FINRA, all those fund guys and gals there. They oversee that.

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You have to have specific licenses to sell and recommend variable annuities. Same thing

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with RILAs, registered index-linked annuities. Those are security products.

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You know, back in the day when I worked for Dean Witter, PaineWebber, UBS, and Morgan Stanley,

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back then, you needed a Series 7 test. I think there's something else for registered investment

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advisors now, RIAs, but the bottom line is you need to be smart and you need to be able

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to pass that test. Most annuity agents could never pass that test. It's a very hard test.

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I could say that it just requires a broad depth of knowledge of everything, options and

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munis and all the stuff. But those are regulated at a federal level.

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So, SEC, FINRA, NASD, kind of overseeing all of that.

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And that's a good thing. I mean, I'm glad the bar is high for that.

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But on the fixed side, which is MYGAs, multi-year guaranteed annuities, single premium immediate

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annuities, deferred income annuities, qualified longevity annuity contracts, indexed annuities,

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income riders attached, those are regulated at the state level, okay? Not the federal level.

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So, for instance, indexed annuities, which were put on the planet in 1995

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to compete with CD returns. Even though they're pitched and sold and, you know,

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fraudulently put in the category of market growth, it's a fixed annuity. It's a CD. Unfortunately,

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the overhype is ridiculous on that side. And most of the people that are doing that overhyping

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aren't qualified to talk about, they wouldn't be qualified to even talk about securities.

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So, I just find it interesting because when I came out to the annuity space,

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because I saw a gap for the Contractual Guarantees Only message, which I dominate now, we're number

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one, the reason for that is, when I came out, I couldn't believe the growth story that agents were

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talking about with annuities. I'm like, "What are you talking about?" If you're going to do growth,

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back in the day there were a couple of very, very good no-load variable

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annuities that you could manage or you could have someone manage for you. But, of course,

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they were purchased by big companies, and that's where good products go to die, and they died.

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So, there's not a lot of choices out there, in my opinion, for the no-load side of the variable

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annuity choices. I always tell people, if you want to buy mutual funds, go buy mutual funds. You

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don't need a variable annuity to do that, and you don't need to pay 3% in annual fees to do that.

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So, that's a tough ask for anybody managing a portfolio

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to be at minus 3% every year before you even start.

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So, what you need to know about the overall regulation of annuities:

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annuities are regulated, whether it's at the federal level with RILAs

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and variable annuities or if it's at the state level with fixed annuities.

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I mean, there's the NAIC, the National Association of Insurance Commissioners.

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They do a fantastic job, and they oversee the fixed annuity space. And they work in conjunction

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with the SEC and FINRA on all annuities to make sure that the consumer is safe,

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that the companies are solvent, that they can back up the claims contractually.

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They do a great job, and that's the reason you don't see a lot of

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articles about annuities and those types of things. You might see a couple. Recently,

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we saw some on private credit. I've got my own feeling on that. I can't say it on video,

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but I'm pretty sure I'm right. If you want to, just shoot me an email,

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[email protected]. I'll give you a quick call and tell you my take on that.

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But that's a non-event, in my opinion, for most annuity carriers.

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There are a couple that are on our screen.

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But getting back to the question, you better believe FINRA and the SEC and the National

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Association of Insurance Commissioners are on top of all these issues going forward

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because with 15,000 people turning 65 every single day, they're looking for

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contractual guarantees. They're looking for some transfer-of-risk strategies.

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And the National Association of Insurance Commissioners, FINRA, and the SEC, they are doing

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a good job to make sure that these people are protected because you can't do retirement over.

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Now, if you're chasing yield, if you're chasing the too-good-to-be-true product,

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then you get what you deserve. You buy annuities for what they will do, not what they might do.

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And for us, it's very simple. We ask two questions: What do you want the money

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to contractually do? When do you want those contractual guarantees to start?

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And from that, we're going to quote all carriers. And for lifetime income,

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it's A+ or better. And then I get involved in the recommendation,

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and then you make your decision on your terms and your time frame.

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So, it's very, very simple. We've made the process very simple, and we'll tell you if

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you don't need an annuity. I mean, we really will after discussions. That happens all the

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time. Or maybe I'll say you're too young, or the timing is not right, or wait until here.

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We tell the truth so we don't have to remember anything, as my grandfather,

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Hunter Garrison, once said. And I remembered.

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Do me a favor. Go to my site, theannuityman.com. Check that out.

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You can run quotes. You can download my six owner's manuals. You can shoot me

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an email at [email protected]. And you can also schedule a call with me.

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And if you don't get me and I'm traveling or somewhere, just tell the person, "Hey,

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just reschedule me for Stan," and I'll get on the phone with you.

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I'm really enjoying my interactions right now on the phone because I'm learning

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what's out there. I'm learning what people are looking for.

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I'm also learning about the really bad sales pitches that are going on that I'm combating,

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and now I know what to combat and what to talk about on these types of videos.

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One last thing. Above my head, clock spinning,

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is another video I did on annuities being commodities. I don't care about

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the brochure. I don't care about the name. All I care about is the contractual guarantee,

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the rating, and then what I recommend. That's it. It's real simple. Break it down to that.

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A couple of my competitors, I think, I'm not sure they're competitors because I am

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who I am, but they say, you know, "Download the brochure" and "Download this." Who cares?

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Who gives a crap? It's all about the rating, the number, and my recommendation.

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And I'm batting a thousand percent over the last three decades.

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So, with that being said, I appreciate you watching this video,

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and I'll see you on the next one.