No one in the annuity industry can argue that it's acceptable for someone to pass a life insurance exam on Monday and be able to sell a fixed indexed annuity on Tuesday. Not only is this unbelievable, but appalling and terrifying at the same time. The industry is looking to this army of untrained agents because no one wants to interrupt the current flow of money.
When I left the large wirehouse world a few years ago, I had come from a world where the Series 7 licensing exam was at least an initial foundational IQ filter. If you have ever taken it, you have to agree that it's a pretty tough test. One of the reasons that I decided to leave my two partners (who are still there at the big firms) is because I wanted to become the national consumer advocate for annuities and an outspoken annuity critic. Even back then, it was driving me crazy to hear the annuity horror stories from my brokerage clients. Now that I'm out here in the annuity swamp, my level of frustration on what's going on is at an all-time high.
Agents need to be mature enough to tell the entire truth about the product, and even say that an annuity is not appropriate…if that is the case. We all know that annuities can be great transfer of risk solutions if placed properly within someone's portfolio. That good advice doesn't happen by accident, and can only be achieved by initial and ongoing agent education at the highest levels.
At the wirehouse firms, I was used to ongoing SEC continuing education requirements along with the in-house ongoing education challenges as well. I had no idea that when I left Wall Street that I would be entering the Wild, Wild West of the financial world. That connotation is being nice and generous, and we all know it.
Raise the bar
The annuity industry, along with the states that oversee them, need to step up to the plate and raise the bar really high for initial and ongoing licensing requirements. I'm not talking about the every-two-year joke CE courses; I'm talking about educational modules similar to those for the Series 7 and CFP certifications. With over 10,000 baby boomers retiring every day, annuity agents need to be legitimately qualified to have conversations with people about their retirement planning and the possibility of annuities being part of a portfolio. We, as an industry, owe that to the people that are depending on our sound advice. In addition, any possible incentives offered to agents should be based on client feedback and satisfaction, not sales volume.
