Special Guest Article by: Chas Wilkins

How does the NASD feel about Variable Annuities? Living Benefit's consumer oriented product line? or National distrust? you decide...

This above position taken by the NASD is what continues the problems with the Variable Annuity industry because there is no official position taken on suitability and in it's marketing of living benefits to the seniors/retirees that are led to purchase a risk product with a false sense of safety conveyed that somehow their money is really not at risk.

But if the NASD is convinced that their Variable Annuity no longer presents itself as a risk, within the market risk products now because of all the added new enhanced living benefit guarantees? Then maybe they should petition the SEC to have it reviewed as a non-risk product regulated by the NASD.

After all any product that uses the word guaranteed as many times as in the Variable Annuity Presentation sale certainly must not be of any risk to any consumer.

I disagree with the above NASD statement and their broad position that it's not a question of whether the product is good or bad? What is considered real compliance with the National Association of Securities Dealers? Only that their products offered are OK ?

IT'S NOT GOOD AS CURRENTLY DESIGNED PEOPLE ARE MISLED BY THE USE OF THE WORD GUARANTEED IN A RISK PRODUCT...{ It's not the product but how it's being sold and to whom }

Is this for real ? Is this then being Compliant ?

It's a product by current design that in itself misleads. The word guaranteed is a word that should never be allowed to be expressed with a risk product. It conveys some type of assurance that's it's OK for you to buy this product and if this that or any other thing occurs you will be all right ! ! !

These problems will never go away because of this "misuse of the meaning guaranteed in a risk product." Is this suitability? Is this being compliant? Is this a commingle of product designs and definitions?

Does the NASD rules send out mixed signals? Are they now a regulator of ambitiousness? Are their rules an exercise in contradictions? Why all the problems? Is this type of risk confusion that they allowed in the Variable Annuity now reached a point beyond their regulatory control?

This extra fee layer that you can buy back part of your loss/risk should not be allowed to be used in any same/similar manner as the word is used in a real guaranteed from loss product. The only real guarantee is that you will have to pay fees...

It tends to convey total safety from any real market loss when in reality there is none and then again tries to change this risk product the Variable Annuity by design and definition into a thing that it's not.

Real product risk should be highlighted not hidden in design that can create this false sense of safety for a product that has direct exposure to the market and it's real potential of loss for any purchaser let alone a senior or retiree.

Unacceptable meaning in product design definition is the real issue folks.

Once again the recent March 2006 decision expressed by the NASD that it's OK for you to exchange you Variable Annuity for another because of better living benefits. Is this their idea of being in Compliance?

Then they get upset with product being offered that by design avoid principal loss and risk attack them as competition when in reality they are the ones who have decided to allow a [ commingle of two different product worlds ]{guaranteed from loss products vs risk products with so called "living benefits"} & actually wonder why all so many complaint's still abound.

[Jump Ball vs. Ping Pong Ball]

The Index Annuity vs. the Variable Annuity

The NASD refers to a Index Annuity as a "jump ball product" this is a term that should have applied to their "new Variable Annuity with living benefits" allowing to make a risk product into something it is not....a pretend to jump from risk to no risk with a introduction of the the word guaranteed in a risk product.

I'm really not sure the NASD does understand any real product difference.

Their boss had said Index Annuities are just too complicated to understand ! so based on these type of comments they just not might understand any real product difference between a true guaranteed from loss product compared to the Variable Annuity with living benefits? It could be rethinking time for the Annuity basics for the higher ranks instead of attack misdirect and then attack some more.

The accreditation method of Index Annuities is not the real issue as the NASD would like you to believe although it does have many methods to reflect your potential for gain without risk to principal. It's not so difficult or confusing that almost 27 billion a year are marketed within this safe product.

These different accreditation methods offer great selection choices for the consumer. This is what's known also as fair market competition between one product or Annuity carrier with another. Just as in any case not all of the safe Index Annuity products are suitable for each and every clients needs. This is why the Index Annuity is offered in different accreditation methods and also different time spans of involvement.

It should not to be the issue as the NASD describes that the the two products are similar in risk etc. A Index Annuity is considered a "safe money product" where a Variable Annuity is considered a" risk product" both by design and definition trying to create confusion in this area is a NASD tactic only.

The Variable Annuity has direct exposure to market risks where as the Index Annuity uses market performance as a external guide only an without direct exposure to the markets and your principal is not a risk.

The NASD representative your Variable Annuity writer dodges a suitability bullet by marketing the Living Benefits in bulk to their consumer then takes a position that because of the guaranteed living benefits all suitability issues have been resolved is this safe thinking for the senior and retired needs?

The NASD as well as the SEC is happy to go along with this BS.. up until of course the next "major complaint unfolds" then it's time to be fined..... only in America. Complaints and fines will continue Variable Annuity products do mislead and it's not in how they are sold and to whom but what it's claims it will do and doesn't after all is not sales perception everything.

Greed to capture the fixed rate {real guaranteed market} is now what's caused all these problems to begin with and false benefit guarantees that have been allowed to be fee forced on the Public in a risk product.

Living benefits are a "misrepresentation in risk reality "created to increase fees and misleading guarantees that allow the misuse of the word guaranteed that serves only to create an illusion that you are not in a risk product at all.

Guaranteed Minimum Withdrawal Benefits GMWB Guaranteed Minimum Income Benefit GMIB Guaranteed Minimum Accumulation Benefit GMAB Guaranteed Minimum Death Benefits GMDB. I could go on and on. These fee based riders are designed to increase the cost of risk products yet "pound into the buyer is the word guaranteed" leaving them then think that by the conclusion of the sale process "their money is not really at any risk at all" but actually is guaranteed from any market loss.

Now they have convinced the SEC to join them in "witch hunts" starting in Florida to go after anyone giving "seminars to Seniors" I guess looking for more fine money they really can't be taking a position the retired are better off in a risk products for all their retirement money or can they?

The NASD has to clean up it's own act starting with this guaranteed Variable Annuity nonsense first and the SEC should be on their case also instead of looking at those who are trying to protect seniors/ retired from product that create false issues.

Why is there still so many complaints/ fines is it because of the guarantees that don't? and why do they call these living benefits when death is required to collect on sum? If this were my retirement money I'm not so sure I would like to die or wait the remainder of my life to get back just what was put in..

If any regulatory agency deserves to be fined it's the NASD for allowing this to continue.The annuity industry flounders on any clear cut rules for senior and retiree safety allowing State regulators to be set off on their own style of interpretation of what's to be safe and considered suitable or not etc.

Do they want to keep [ all retirement dollars at risk in retirement? ] I don't think this type thinking really meets the Principles and Code of Ethical Market Conduct ?

State regulators can not really regulate security products already a tilt in fairness has been created against the fixed/index annuity industry.

Once it allowed this word "guaranteed" to be bounced around the room in a Variable Annuity presentation without prejudice and any avoidance as much as any ping pong ball knowing all too well that any misuse of this word in any sale presentation for any risk product is all to easy to lead into the many misunderstandings that can be created for any age bracket.

This should not be allowed to happen when dealing with any ones retirement savings.

The "living benefits" might have saved the Variable Annuity industry but at what cost?

Never has any product generated so much national public distrust it really abounds but the NASD taken in a fortune in fines. They have allowed this problem to continue and are the only ones who can resolve it. Take away the NASD ability to profit from fines and objectivity might return to the issues at hand.

Does the Variable Annuity Industry today reflect National Distrust? 464,000 pages in just one browser below but it's the Index Annuity that they want to take the heat! Why is that.......

Has any risk product generated so much in fines for the NASD?? Do you think the misuse of the word & meaning for guaranteed product has created this problem?? At the rate the "NASD fines everyone" you would thing that they only have total idiots to market this risk product amazing.

I don't believe that at all but what is very obvious the NASD has found a good thing with Variable Annuities in more ways then one. Some how the words regulating and or orchestrating have seem to create these not so impressive results that have been achieved here. [ 464,000 pages of complaint issues ] on just one browser not a record I would like to hang my hat on.....The question who is really paying for these remarkable results has to be asked?