FINRA Discusses Regulatory Focus for Registered Index-Linked Annuities

Posted on November 12th, 2020 at 2:37 PM
FINRA Discusses Regulatory Focus for Registered Index-Linked Annuities

From the Desk of Jim Eccleston at Eccleston Law LLC:

At a recent conference, FINRA CEO Robert Cook provided some guidance on registered index-linked annuities (“RILAs”), according to an article in ThinkAdvisor. As described in the ThinkAdvisor article, RILAs are annuities that determine gains and losses based on a stock market index.

Speaking at the Life Insurance Products 2020 conference, Cook said that sales of RILAs have increased over the last four to five years, including a “significant jump” in the first half of 2020. Cook said that when it comes to RILAs, FINRA focuses on the disclosures made to customers, the concentration and liquidity of the customer’s portfolio, and the customer’s understanding of the product and the return the product will provide.

According to FINRA, the need for disclosures and customer understanding of RILAs is especially important given the complex nature of the product and the fact that returns for RILAs may be capped in exchange for less risk. Cook also emphasized that customers that are being moved into RILAs from other annuities need to understand the benefits they will be giving up with their old annuity.

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Tags: eccleston, eccleston law, finra, RILAs, thinkadvisor

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