Florida Battles Annuities, But Why?
Dec 22, 2008
InsuranceNewsNet, Inc.--December 19, 2008
By Steven A. Morelli, Senior Editor
Florida has been blaring the sirens on inappropriate annuity sales but there does not appear to be an actual fire.
The latest is a bill proposed by state Rep. Clay Ford, R-Gulf Breeze. The “Senior Annuity Bill of Rights” would classify indexed annuities as securities. It would also, for any annuity, limit surrender charges to 9 percent and nine years. It would allow seniors to withdraw 10 percent each year without any charges and they would be able withdraw all of it in case of terminal illness.
The issue for the state is not the structure of annuities but how they are sold. The state insurance consumer advocate office said it gets hundreds of calls a year from consumers, about 70 percent of them involving annuity sales. Neither that department nor Ford has said how the annuities bill would change that. The bill would limit the products themselves but not restrain any rogue sales.
This follows an advisory issued jointly by the state attorney general and the state elder affairs offices earlier this month. It warned seniors to be wary of “free lunch seminars.”
“The Attorney General’s Office has received more than a dozen complaints from seniors enticed to attend a free meal that actually turned out to be a high-pressure sales pitch for investments that may be entirely inappropriate for the individual based on his or her age and financial circumstance,” the release said.
That led to newspapers and Web sites running with all sorts of variations on the “There’s no free lunch” theme and included a helpful checklist from the AARP.
The only problem was the release was not entirely true. The attorney general’s office did get 13 complaints – since 2003. It got one in 2008 and that was from someone in July suggesting the department investigate an agency that sent out a postcard that offered a free dinner seminar.
The press release describes high-pressure seminars run by predators who rob seniors of their nest eggs.
“Florida’s seniors spent their lives hearing there’s no such thing as a free lunch, and now some unscrupulous hucksters are trying to make them think otherwise,” said Elder Affairs Secretary E. Douglas Beach in the release.
But the press spokesman at the elder affairs department said the agency did not get any complaints, which would typically go to other departments such as the attorney general. The attorney general’s office said they published the press release at the request of the elder affairs department.
The release also cites advice from the Financial Industry Regulatory Authority (FINRA) warning that seniors should not buy anything at a free meal seminar. This is the same agency that as the enforcement arm of the Securities and Exchange Commission failed to stop what is shaping up to be the biggest swindle in world history, much of it originating in Palm Beach, Fla., where Bernard Madoff is accused of luring many his mostly elderly “investors” to throw away about $50 billion.
Missing in all this is the gratitude many retirees are expressing because they bought annuities. As investments plummet in retirement funds across the world, those with annuities are breathing easier because they haven’t lost their principal.
Now, that’s a tasty side dish.