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TAG | life insurance products
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Big Promises but Skimpy Returns Plague Equity-Indexed Annuities.
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AARP’s website posted an article from The Kiplinger aimed at the baby-boomer investor. The article, written by Kimberly Lankford goes on to say that the pitch is compelling: Participate in the stock market’s upside and avoid the downside. That’s how sales agents who collect lucrative commissions peddle equity-indexed annuities. Their targets are baby-boomers who are trying to rebuild their nest eggs and are now fearful of the stock market and frustrated with bonds’ low interest rates.
Most equity-indexed annuity contracts promise that you will never lose money, even if the market index declines. But these costly products give you only a portion of the market’s gains, and their protection against loss is minimal. If you’re looking for principal protection, consider buying a deferred variable annuity with guaranteed benefits.
The Fuzzy math. Despite the title, equity-indexed annuities don’t actually invest in the stock market. Your returns may be loosely based on a market index, but you get a lot less than investors in the actual index would receive because of caps on returns and other limitations.
For example, if Standard & Poor’s 500-stock index returns 26% this year, as it did in 2009, investors in some of the Phoenix Companies’ equity-indexed annuities would receive just 6.5% or less — fairly typical for these products. Some equity-indexed annuities offer higher caps but reduce your returns by other means, such as restricting your participation rate to 80% of an index’s increase or subtracting a fixed percentage (a spread rate) from the index’s return. Worst of all, these limitations can change even after you’ve purchased the annuity. Plus, you may be locked in to the investment for seven to ten years and pay a penalty if you cash out early.
Indexed annuities are regulated as insurance products, not securities, so they offer few of the usual required disclosures to help you decipher their fees, calculate performance or even figure out how the money is invested. And the new financial-reform bill would keep it that way; it bars the Securities and Exchange Commission from implementing a rule to oversee them.
Call a Securities Arbitration Lawyer for a free consultation on how to recover your losses. To speak with an attorney, call 888-760-6552, or visit www.stockmarketlawsuit.com. Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.
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Claude Steven Mosley (CRD #1161832, Registered Representative, Myrtle Beach, SC) submitted a Letter of Acceptance, Waiver of Consent in which he was fined $15,000 and suspended from association with any FINRA member in any capacity for four months. Without admitting or denying the findings, Mosley consented to the described sanctions and to the entry of findings that he sold variable annuities issued by an annuity and life insurance company to a number of clients while at a member firm, and upon joining another member firm, he was appointed to sell the same annuity and life insurance products, and sought to have the variable annuities that he had sold while at the previous firm transferred to his new firm. The findings stated the the annuity and the life insurance company did not permit the block transfer but some of Mosley’s customers submitted change-of-dealer forms to the company. The findings also stated that Mosley contacted the company and, without specific customer authorization, reallocated the sub-accounts for numerous variable annuities belonging to many individulas including customers of the second firm that he had sold while at the previous firm. The findings also included that Mosley had not obtained written authorization for the use of discretionary authority from the customers at his second firm, and the remaining customers whose sub-accounts were reallocated were not customers of his second firm but had remained with Mosley’s first firm. FINRA found that Mosley had not sought his second firm’s prior approval to engage in these transactions for non-customers.
The suspension is in effect from Dec. 6, 2010, through Apr. 5, 2011. (FINRA Case # 2009019272201)
This sanction appeared on the FINRA website’s Disciplinary Actions for January, 2011.
If you have been a victim of the alleged fraudulent schemes of Claude Steven Mosley, or a similar situation, call a Securities Arbitration Lawyer for a free consultation on how to recover your losses. To speak with an attorney, call 888-760-6552, or visit www.stockmarketlawsuit.com. Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.
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