Thursday, February 12, 2009

The Unfortunate Demise of the Free Dinner Seminar

Various groups have perpetuated a false belief that insurance agents offering index annuities are predators, especially when their sales practices include free dinner seminars.

On June 25, 2008, the SEC proposed Rule 151A, saying that the growth of index annuity sales “has, unfortunately, been accompanied by growth in complaints of abusive sales practices.” At the SEC meeting where the rule was proposed, the Commission played a segment of a Dateline NBC news segment alleging rampant abuses by annuity salespeople, such as in free dinner seminars. Now, even the AARP has launched a program against free dinner seminars, starting a program where people are encouraged to become volunteer “Free Lunch Monitors” and share stories of abusive sales practices with regulators and each other.

The fact, however, is that relative to the number of retirees helped by index annuities (and reached through free dinner seminars) there are not a lot of complaints. The SEC admitted as much in its final release of Rule 151A on January 8, 2009. It responded to assertions by the annuity industry that there is no evidence of widespread annuity sales abuse by answering that “the presence or absence of sales practice abuses is irrelevant in determining whether an annuity contract is entitled to the exemption from federal securities regulation.”

So, one of the most dangerous aspects of Rule 151A is that it has created a toxic atmosphere for insurance agents who wish to offer free dinner seminars to reach out to potential consumers. The demise of the free dinner seminar, a demise which is based on false rumors and false beliefs, will hurt consumers who would otherwise have been helped by the services offered by insurance agents.

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1 comment:

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