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EIA sellers dispense ‘advice’ on securities

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July 23, 2007 6:01 am ET

Regarding the rebuttal article by Kim O’Brien [executive director of the National Association for Fixed Annuities in Milwaukee] on equity index annuities [Other Views, June 25], I would like to make two points.

She argues that indexed annuities aren’t securities, because the insurance company bears the risk.

I think that the sellers of these products should be security licensed, because in many cases, they are convincing [investors] that their stocks and mutual funds are too risky and that they should replace them with an indexed annuity.

So in essence, they are giving advice on securities. The public is led to believe that they can get the same returns with none of the risk.

She also states that the insurance industry is “regulated heavily.” Is that why there are products out there offering commissions of 13% to 15%, with 15-year surrender periods, that don’t go away, even at death?

Is that why so many seniors are being misled to invest their life savings in a product they can’t get out of? Maybe what we need are the state agencies to start “highly enforcing” their heavy regulations.

Gary Klein, ChFC

Regal Wealth Group Inc.

Seal Beach, Calif.

Benefit firms must seize the rollover opportunity

Gary Mogel’s article about the mergers of advisers and benefit firms [July 9] is not only on the right track, it is dead on.

Benefit firms that don’t do something about the rollover market will miss the boat.

I would like to point out that Sentinel Benefits Group Inc., a 160-person benefit firm in the Boston area, saw this opportunity seven years ago and started both an investment advisory business and broker-dealer to position itself for the rollover market.

Today, Sentinel Advisors has chartered financial analysts and certified financial planners on staff to work with participant accounts.

We have opened nearly 2,000 accounts over the past few years, and the activity is increasing exponentially.

The opportunity to manage rollover money has turned into wealth management services for high-net-worth people, as well. It has turned into fast-growing part of the Sentinel enterprise.

John A. Carnevale

President and chief executive

Sentinel Benefits Group Inc.

Wakefield, Mass.

Benefit firms face a commission squeeze

I enjoyed your article [“Mergers of advisers and benefit firms seen as a natural fit,” July 9]. I agree with the premise, but we do it a little differently.

The way I see it, firms that offer health insurance and other welfare benefits have a potential problem. As health care and these other benefits are evolving, commissions are getting squeezed.

We are seeing a lot of interest from these firms in forming relationships with wealth managers who can provide an outsourced wealth management platform to their clients where the benefit firm gets half of all revenue generated.

Matthew Tuttle, CFP

President

Tuttle Wealth Management LLC

Stamford, Conn.

Skin tone affinity is only skin deep

Just a quick note to thank you for the May 28 article “Advisers bristle at raced-based assignments.”

I am quite certain the information in your article isn’t new, as it clearly reveals the complexities of using old “social constructs” such as race.

How futile it is for anyone to suggest that because people share their same hue of skin, they are similar and will more likely be at ease “with their own kind.” I can tell you as a South African (black, since we’re talking about race), there’s not much I have in common with an African-American.

I come from a “majority” and don’t think in terms of “minority” — they are two very different perspectives of life.

Besides, the commonwealth of humanity is much too large for “sameness” labels and categorical thinking. When will it end?

At any rate, thanks for the enlightenment.

Bryan Sykes

Financial representative

Silver Springs, Fla.

Primerica Financial Services Inc.

12(b)-1 fee the same as a life agent’s trail

Regarding your July 16 editorial “SEC must tread carefully with 12(b)-1s,” we have been a broker-dealer specializing in mutual funds since 1960.

Your article was the first to outline explicitly the “new use and value” of 12(b)-1s. Without 12(b)-1s, we would close down our dealership — and you are correct: Our past clients would have no person to call for service.

The 12(b)-1s are exactly the same as the trail commissions used in the life insurance industry.

A $10-a-year trail for one client multiplied by 500 clients translates into $5,000 a year; ergo, the agent protects and services each $10 renewal, because yearly, it adds up to $5,000.

Keep up the good work. InvestmentNews offers the best reporting in the business.

Herb Abelow

First Mutual Planning Corp.

Delray Beach, Fla.

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